Economic Buzz: US GDP shrank 0.5% in Q1

Revised data released by the Commerce Department on Thursday showed the U.S. economy shrank by more than previously estimated in the first quarter of 2025.

The Commerce Department said real gross domestic product fell by 0.5 percent in the first quarter compared to the previously reported 0.2 percent dip.

The bigger than previously estimated decline primarily reflecting downward revisions to consumer spending and exports that were partly offset by a downward revision to imports, which are a subtraction in the calculation of GDP.

The modest decrease by GDP in the first quarter came following a 2.4 percent jump by GDP in the fourth quarter of 2024.

The downturn by GDP primarily reflected an upturn in imports, a deceleration in consumer spending, and a downturn in government spending that were partly offset by an upturn in investment.

On the inflation front, the Commerce Department said the personal consumption expenditures price index surged by 3.7 percent in the first quarter, 0.1 percentage point higher than previously estimated.

The jump by the core PCE price index, which excludes food and energy prices, was also upwardly revised by 0.1 percentage point to 3.5 percent.

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