The U.S. economy contracted at a 0.5% annual rate in Q1 2024, down from a previous estimate of -0.2%. Trade wars initiated by President Trump led to reduced consumer spending and an increase in imports, which surged by 37.9%, contributing to significant GDP decline. Economists did not expect changes in estimates, highlighting the unexpected deterioration in economic performance. Despite a decreasing trend in growth, a measurement of underlying economic strength rise at 1.9%, although it is down from previous quarters. Concerns about tariff impacts on consumer spending were emphasized by experts.
"Consumers tightened their wallets a lot more than initially anticipated in the first three months of the year as tariff uncertainty weighed," noted Priscilla Thiagamoorthy.
"Imports expanded 37.9 percent, the fastest since 2020, pushing GDP down by nearly 4.7 percentage points."
The January-March drop in gross domestic product reversed a 2.4 percent increase in the last three months of 2024.
Economists had forecast no change in the department's third and final estimate for the first quarter.
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