The U.S. economy contracted at an annual rate of 0.5 percent in the first quarter of the year, according to the Department of Commerce, whose third and final estimate of gross domestic product (GDP) for the January–March period marked a further downgrade from its two earlier readings.
The decline in economic activity was largely driven by a surge in imports—which subtract from GDP calculations—a reduction in government spending, and a slowdown in consumer spending, according to the Jan. 26 report from the Bureau of Economic Analysis (BEA), an agency of the Commerce Department.
The import spike that weighed on growth came as businesses accelerated purchases ahead of President Donald Trump’s anticipated tariff policies. Imports began to soar in December 2024 as Trump vowed to impose tariffs once sworn into office, with January 2025 marking another import surge as businesses continued to stockpile goods. The trend of front-running tariffs by increasing imports continued through February and March, putting downward pressure on GDP….