First-quarter 2025 GDP down more than initial estimate

First quarter U.S. economic growth declined more than initially estimated, with an increase in imports and a decline in government spending pushing activity lower, according to Thursday’s (June 26) report from the U.S. Bureau of Economic Analysis.

Real gross domestic product (GDP) was down at an annual rate of 0.5% in the first quarter of 2025, lower than the initial estimate of 0.3%. In the fourth quarter of 2024, real GDP increased 2.4%.

“The decrease in real GDP in the first quarter primarily reflected an increase in imports, which are a subtraction in the calculation of GDP, and a decrease in government spending,” the BEA noted in the report. “These movements were partly offset by increases in investment and consumer spending.”

The GDP report noted that consumer spending and private investment were up in the quarter, but not as much as in the original estimate.

“Real final sales to private domestic purchasers, the sum of consumer spending and gross private fixed investment, increased 1.9 percent in the first quarter, revised down 0.6 percentage point from the previous estimate,” according to BEA.

Following are other details in Thursday’s GDP report.
• The decrease in real GDP reflected decreases of 2.8% in real value added for private goods-producing industries and 0.3% for private services-producing industries that were partly offset by an increase of 2% in real value added for government.

• Within consumer spending, the largest contributor to the revision was services, led by recreation services and transportation services, based on new and revised first-quarter data from the Census Bureau Quarterly Services Survey.

• Within exports, the downward revision was to services, led by other business services and charges for the use of intellectual property.

• Within imports, the revision reflected downward revisions to both services (led by other business services) and goods (led by industrial supplies and materials as well as by capital goods, except automotive).

• Real gross domestic income (GDI) increased 0.2% in the first quarter, revised up 0.4 percentage point from the previous estimate.

• The personal consumption expenditures (PCE) price index increased 3.7%, and the PCE price index excluding food and energy increased 3.5%, both 0.1 percentage point higher than previously estimated.