For the first time since early 2022, the US economy has recorded negative growth.
Data from the Bureau of Economic Analysis show that gross domestic product (GDP) fell at an annualized rate of 0.3% in the first quarter of 2025, missing economists’ expectations. The decline reflects weaker domestic demand and other factors that weighed on economic activity during the period.
The slowdown follows a robust 2.4% annualized expansion in the fourth quarter of 2024. One important contributor to the Q1 contraction was a rise in imports, which reduce GDP when foreign goods and services displace domestic production. Other influences included softer consumer spending and lower business investment compared with the prior quarter.
Although GDP contracted in the opening quarter of 2025, economic readings are mixed across sectors. Employment and wage gains have continued in some areas, while manufacturing and certain service industries showed signs of strain. Policymakers and market participants will be watching upcoming data for signals on whether the weakness is temporary or the start of a more persistent slowdown.
Analysts note that quarterly GDP figures can be volatile and are often revised as more comprehensive source information becomes available. Future revisions could alter the initial view of growth. Still, the first-quarter contraction highlights the importance of monitoring trade balances, consumer behavior, and investment trends as determinants of near-term economic performance.