U.S. gross domestic product contracted by an annualized 0.3% in the first quarter of 2025, according to the Commerce Department’s advance estimate released at the end of April 2025. This marked the first quarterly decline in about three years and followed solid growth in late 2024. The contraction was driven largely by a surge in imports and weaker consumer spending, as households and firms front‑loaded purchases of foreign goods ahead of higher tariffs under President Donald Trump’s new trade agenda. Because imports subtract from the GDP calculation, this rush to buy abroad mechanically reduced headline growth even as underlying domestic demand remained positive. Economists and market participants linked the downturn to heightened policy uncertainty around Trump’s tariff and trade plans, which weighed on business confidence, capital spending decisions, and hiring intentions. A key underlying demand metric—real final sales to private domestic purchasers—still grew at about a 1.9% annual rate, but that was a clear slowdown from the prior quarter’s pace, and consumer spending growth fell sharply from roughly 4% at the end of 2024 to about 0.5% in early 2025, the weakest since the pandemic period. The negative print revived recession concerns and intensified debate over the risks of an aggressive protectionist stance, even as many forecasters projected a rebound later in 2025 if the import surge and tariff‑related distortions proved temporary.

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