For the first time in three years, the U.S. economy shrank, with the gross domestic product declining by 0.3% in the first quarter of 2025. This marked the first contraction of the U.S. economy during a quarter since the first quarter of 2022, according to data released Wednesday by the Bureau of Economic Analysis.
The data follows a quarter after the U.S. economy grew by 2.4% in the fourth quarter of 2024.
The decrease in GDP was primarily due to a drop in imports, which fell by over 5% in the first quarter. This could be an indication that the specter of tariffs has cooled imports into the U.S. Earlier this month, President Donald Trump implemented a global 10% duty on most goods entering the country, having previously placed a 25% tariff on steel and aluminum imports.
Consumer spending on goods and services also declined compared to late 2024, according to the data.
Conversely, there was an uptick in business investment, particularly in nonresidential equipment and structures.
The new data will likely fuel speculation about whether the U.S. economy will enter a recession. Some economists have expressed concern that President Trump's tariffs could slow economic growth.
While not directly responding to Wednesday's new data, President Trump said on a social media post that tariffs have "nothing to do" with bad numbers.
"When the boom begins, it will be like no other. BE PATIENT!!!" President Trump wrote.
