The US economy shrank by 0.3 per cent year on year in Q1 2025, marking a reversal from the 2.4 per cent growth recorded in the final quarter of 2024, the Bureau of Economic Analysis (BEA) reported on Wednesday. The contraction was driven largely by a rise in imports, which counts as a subtraction in GDP calculations—and a decline in government spending. These were only partially offset by gains in consumer spending, business investment, and exports. Despite the overall GDP decline, underlying private-sector demand remained resilient. Real final sales to private domestic purchasers, a measure of consumer and business activity excluding government and trade, rose by 3.0 per cent, slightly up from 2.9 per cent in the previous quarter. Price pressures intensified during the quarter. The gross domestic purchases price index increased by 3.4 per cent, compared with 2.2 per cent in the fourth quarter. The personal consumption expenditures (PCE) price index rose by 3.6 per cent, while the core PCE index—which excludes food and energy—rose by 3.5 per cent, up from 2.6 per cent. In nominal terms, or current-dollar GDP, the economy grew by 3.5 per cent in the first quarter. Attribution: Amwal Al Ghad English Subediting: M. S. Salama
