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📉 U.S. GDP Contracts in Q1 2025: BEA’s Second Estimate Confirms Downturn📉

The Bureau of Economic Analysis released its second estimate for Q1 2025, showing that real GDP declined by 0.2% (annualized)—a downward shift following 2.4% growth in Q4 2024.

🔍 What drove the contraction?

A sharp increase in imports (a GDP subtraction)

Decreased government spending

Weaker consumer spending, particularly in services like healthcare and recreation

Corporate profits fell by $118.1 billion, reversing the $204.7B gain in Q4


✅ Offsetting positives:

Stronger investment, including private inventories and nondurable goods manufacturing (chemicals)

Export growth showed resilience despite a softening domestic economy


đź“Š Price Pressures Remain:

PCE price index: +3.6% YoY (unchanged from the advance estimate)

Core PCE (ex. food & energy): +3.4%, slightly revised down


đź’¬ Notable revisions:

Investment revised up (esp. inventories)

Consumer spending revised down (both goods and services)

Real final sales to private domestic purchasers: Revised to +2.5% from +3.0%


🏦 Implications:

 With GDP and GDI both posting a -0.2% decline, concerns over a potential "growth pause" or policy lag are intensifying—particularly as inflation remains sticky and corporate earnings shrink.

đź“… Next release: June 26 – Third Estimate + Corporate Profits (Revised)


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