US GDP contracts 0.6% in Q1

Summary

Real US GDP contracted at an annualized rate of 0.5% in Q1 2025 (January-March) per the Bureau of Economic Analysis third estimate released June 26, 2025; BEA's September 25, 2025 annual benchmark update later revised this down to -0.6%. This was the first contraction since Q1 2022.

What happened

The primary driver was a massive surge in imports as businesses rushed to stockpile goods ahead of expected tariffs - imports are a subtraction in GDP calculation. Government spending also declined. Consumer spending growth slowed to 0.6% from 3.9% in Q4 2024 (as currently revised). The first advance estimate on April 30 showed -0.3%; the June 26 third estimate revised this to -0.5%; and BEA's September 25, 2025 annual update of the National Economic Accounts revised it further to -0.6%.

Impact on the United States

The contraction came as confidence fell: NPR reported the Conference Board's consumer confidence index had fallen for five straight months, its forward-looking elements were well below the level that typically signals a looming recession, and job-market expectations were the worst since 2009.

Documented effects

1. Sep 2025Q1 2025 GDP third estimate: -0.5% annualized (released June 26, 2025); BEA's September 25, 2025 annual update revised it to -0.6%. The first contraction since Q1 2022.[1][3]
2. Real consumer spending grew at a 0.6% annual rate in Q1 2025, down from 3.9% in Q4 2024 (BEA data as currently revised).[3]
3. Apr 2025The Conference Board's consumer confidence index had fallen for five straight months by April 2025, and its survey found expectations about the job market were the worst since 2009.[2]

Why this is rated significant

First GDP contraction in three years reflects real macroeconomic harm, but a single quarterly dip is bounded and partly driven by import timing.

revised to -0.6% in BEA's Sept 25, 2025 annual update

Corrections & updates [2]

Every change to a fact on this page after publication is logged here, newest first.

1. Sep 29, 2026CorrectedSource

   Source s3 was a BEA blog post announcing that the annual update would start Sept 25, 2025; it does not state the -0.6% revision. It is replaced with BEA's real GDP growth series (via FRED), which shows Q1 2025 at -0.6% and Q1 2022 (-1.0%) as the prior contraction. The consumer-spending effect was cited to NPR's April 30 report, which gave 1.8% (advance estimate); BEA's current data show real consumer spending grew 0.6% in Q1 2025 after 3.9% in Q4 2024.[3]

2. Sep 29, 2026CorrectedFigure

   The entry gave recession-probability estimates from the Wall Street Journal (45%), IMF (40%), BCA Research (75%) and Reuters (nearly 50%), citing NPR's April 30, 2025 article, which contains none of them. They are removed and replaced with what NPR reports: the Conference Board's consumer confidence index had fallen five straight months, with its forward-looking measures below the level that typically signals a recession and job-market expectations the worst since 2009. BEA's announcement that its 2025 annual update began Sept. 25, 2025 is added as the source for the revision date.[2][4][3]

Sources [4]