U.S. economy contracts by 0.3% in first quarter

Investing.com - The U.S. economy unexpectedly contracted in the first quarter, while consumer spending slowed, potentially indicating the impact of ongoing uncertainty around aggressive and erratic U.S. trade policies during the opening months of President Donald Trump’s second term in the White House.

U.S. gross domestic product, an indicator of growth in the world’s biggest economy, contracted by 0.3% during the January to March period, according to an advance estimate from the Commerce Department’s Bureau of Economic Analysis on Wednesday. In the fourth quarter, it had grown by 2.4%. Economists had predicted slight expansion of 0.2%.

A massive surge in imports, which are a substraction in the calculation of the GDP figure, primarily accounted for the decline, the BEA said. A drop in government spending also weighed on the number.

The spike were the latest sign of a race by companies to lock in lower prices on imported goods ahead of the imposition of sweeping tariffs by Trump in early April. The president has since delayed for 90 days these levies on most countries following deep ructions in stock and bond markets, and has shown a recent willingness to make concessions with specific industries.

But businesses have already flagged that the murky operating outlook caused by the tariffs is complicating their investment plans, while consumer confidence has begun to deteriorate.

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