The U.S. economy shrank by 0.5% quarter-on-quarter in the first quarter

The final revised data released by the US Department of Commerce shows that the US gross domestic product (GDP) contracted by 0.5% quarter-on-quarter on an annualized basis in the first quarter of 2025, a significant downward revision from the initial estimates and revised figures previously released.

Xinhua News Agency reported that the US Department of Commerce said on Thursday (June 26) that this data mainly reflects the downward revision of consumer spending and export data. Specifically, the quarter-on-quarter growth rate of imports in the first quarter was revised down to 37.9%, and the growth rate of exports was revised down to 0.4%. Net imports dragged down the GDP in the first quarter by nearly 4.7 percentage points. Affected by the downward revision of service data, the contribution of personal consumption expenditure, which accounts for about 70% of the US economy, to the GDP in the first quarter was revised down to about 0.3 percentage points.

Analysts believe that the contraction of the US economy in the first quarter was mainly due to the significant increase in imports caused by the US tariff policy. The impact of tariffs on inflation is the focus of attention in the next step.

The US Department of Commerce usually makes three estimations of quarterly economic data based on constantly improving information.