The U.S. Bureau of Economic Analysis has reported a decrease in the real gross domestic product (GDP) at an annual rate of 0.3 percent for the first quarter of 2025, which contrasts with a 2.4 percent increase in the previous quarter. The downturn in GDP is attributed primarily to a rise in imports and a reduction in government spending, partially counterbalanced by increases in investment, consumer spending, and exports.
The first quarter also saw real final sales to private domestic purchasers increase by 3.0 percent, compared to the fourth quarter's rise of 2.9 percent. Furthermore, the price index for gross domestic purchases climbed by 3.4 percent, exceeding the 2.2 percent rise from the previous quarter. Personal consumption expenditures (PCE) price index rose by 3.6 percent, with the core PCE index, excluding food and energy, increasing by 3.5 percent.
The trade data contributing to this report includes U.S. International Trade in Goods and Services data and the Census Advance Economic Indicators Report for March. Notably, imports saw a surge in consumer goods and capital goods. Additionally, the Bureau identified a significant rise in silver bars' imports, viewed as an investment, which was adjusted accordingly in national accounts.
A notable decrease in government spending emerged from reduced federal expenditures, particularly in defense, while state and local spending saw some growth. Concurrently, private inventory investment grew, led by an increase in the wholesale trade sector.
California’s wildfires in January 2025 significantly disrupted local economic activities but have not been singled out in GDP estimates due to the nature of the data used. Preliminary estimates show substantial losses in privately and publicly owned fixed assets.
The next GDP estimate release is scheduled for May 29, 2025, with further insights into corporate profits.