### U.S. GDP Declines Slightly in First Quarter of 2025

The U.S. Bureau of Economic Analysis has reported a minor contraction in the real gross domestic product (GDP) for the first quarter of 2025, which dipped at an annual rate of 0.2 percent. This downturn follows a significant growth of 2.4 percent in the fourth quarter of 2024.

The primary factors contributing to the GDP decrease include a rise in imports and a reduction in government expenditure. Imports are considered a subtraction in the GDP calculation, and the government spending cutbacks further dampened economic performance. However, these negative effects were somewhat mitigated by enhancements in investment, consumer spending, and exports.

The latest GDP figure marks a 0.1 percentage point upward revision from the initial advance estimate, thanks to a reassessment that found investment had been slightly higher than previously thought. Conversely, consumer spending was revised downward, tempering the overall positive impact.

When compared to the fourth quarter of 2024, the first-quarter downturn also saw notable changes such as an upturn in imports, a slowing of consumer spending, and a drop in government spending. These were partly balanced by increases in both investment and exports. Real final sales to private domestic purchasers, which combine consumer spending and gross private fixed investment, grew by 2.5 percent, though this figure was adjusted down from a prior estimate by 0.5 percentage points.

Inflation indicators also showed mixed results. The price index for gross domestic purchases went up by 3.3 percent, a slight downgrade of 0.1 percentage points from earlier estimates. The personal consumption expenditures (PCE) price index saw an increase of 3.6 percent, holding steady from the previous figure. When excluding food and energy prices, the PCE price index increased by 3.4 percent, revised down by 0.1 percentage point.

Real gross domestic income (GDI) mirrored the GDP's performance, showing a 0.2 percent decrease during the first quarter, a stark contrast to the 5.2 percent rise in the fourth quarter of 2024. Corporate profits also took a hit, plummeting by $118.1 billion in the first quarter, after a strong increase of $204.7 billion in the last quarter of the previous year.

This data presents a nuanced picture of the U.S. economy, revealing underlying strengths and vulnerabilities as it navigates through 2025.