Revised data released by the U.S. Department of Commerce on May 29th showed that U.S. gross domestic product (GDP) contracted by 0.2% quarter-over-quarter on an annualized basis in the first quarter of 2025, an upward revision of 0.1 percentage point from the initial estimate.
Compared to the 2.4% GDP growth projected for the fourth quarter of 2024, this change in data highlights the continued rise in uncertainty caused by the U.S. government’s tariff policies, which has led to a decline in business and consumer confidence.
Specifically, the revised data showed that net exports weighed on GDP by 4.9 percentage points in the first quarter, an increase from the initial estimate of 4.83 percentage points. This suggests that businesses, concerned about potential future tariff increases, stockpiled inventory, leading to a surge in imports that quarter.
The U.S. Department of Commerce stated that the 0.1 percentage point upward revision to GDP primarily reflected an upward revision to investment, partially offset by a downward revision to consumer spending. Non-residential fixed asset investment, which reflects business investment, grew by 10.3%, boosting economic growth by 1.36 percentage points in the quarter. Personal consumption expenditures, which account for about 70% of the U.S. economy, grew 1.2%, boosting economic growth by 0.8 percentage points in the quarter.