Washington
CNN
—
The US economy shrank slightly less in the beginning of the year than previously reported, new data shows, but it was still the first quarterly decline since 2022, in a sign of how President Donald Trump’s chaotic and aggressive tariff regime is affecting American consumers and businesses.
Gross domestic product, which captures all the goods and services produced in the economy, registered an annualized rate of -0.2% in the first quarter, according to the Commerce Department’s second estimate released Thursday. An initial estimate showed that GDP fell 0.3%.
Trump’s tariffs have prompted American companies and consumers to pull forward purchases to get ahead of any sticker shock stemming from the duties, which has sent imports surging. But a federal court’s ruling late Wednesday has thrown Trump’s entire trade policy into question.
Still, Trump’s trade war is far from over. His administration appealed Wednesday’s ruling from the three-judge panel at the US Court of International Trade in Manhattan. Uncertainty stemming from Trump’s policies is expected to persist, but there are also questions over the underlying health of the US economy.
The latest GDP data isn’t quelling those fears: A key gauge of demand in the economy — referred to as real final sales to private domestic purchasers — was revised down by a sizable half percentage-point for the first quarter. Consumer spending, the lifeblood of the US economy, was also revised lower, factoring in weaker spending on food, cars and financial services.
An upward revision to private inventory investment — specifically by nondurable goods manufacturers and companies in the information industry — offset those new weaker figures.
This story is developing and will be updated.
