The US economy contracted in the first quarter for the first time in three years, on less government spending and a surge in imports as companies stocked up on inventories before tariffs take effect.
Gross domestic product (GDP) contracted at an annual 0.3pc pace following growth of 2.4pc in the fourth quarter, the Bureau of Economic Analysis said today. GDP last fell by 1pc in the first quarter of 2022. Economists surveyed by Trading Economics had forecast 0.3pc GDP growth for the first quarter.
Businesses stocked up on imports to get ahead of tariffs that President Donald Trump has wielded to restructure the global trading system. A monthly employment report in two days may show the impacts of Trump's mass federal firings, while Federal Reserve policymakers will meet next week to consider the effects of Trump's policies on prices.
Imports, which detract from GDP growth, expanded by 41.3pc after falling by 1.9pc in the fourth quarter. Exports grew by 1.8pc after declining by 0.2pc.
Consumer spending rose by an annual 1.8pc in the first quarter following 4pc growth in the fourth quarter. Domestic investment, which includes inventory builds, rose by an annual 21.9pc following a decline of 5.6pc in the prior quarter. Spending on equipment rose by 22.5pc following an 8.7pc decline in the fourth quarter.
Government spending fell by 1.4pc after growth of 3.1pc. Federal spending fell by 5.1pc after growth of 4pc. Defense spending was down by an annual 8pc.
By Bob Willis
