WASHINGTON— The U.S. economy shrank in the first quarter of 2025, as companies accelerated imports in anticipation of new tariffs.
According to the Commerce Department, GDP declined at an annual rate of 0.3% after adjusting for inflation and seasonal factors. This marked the sharpest drop since the first quarter of 2022.
"Real GDP fell slightly in the first quarter as consumer spending moderated,” said Curt Long, America's Credit Unions chief economist. “Meanwhile, imports increased 41% as businesses stocked up on inventory ahead of tariff increases. Consumption still grew, albeit at a slower rate than previously, and business investment rebounded from a poor fourth quarter. More troublingly, inflation accelerated, which combined with tariffs pushes the prospect for rate cuts further into the future.”