US economy contracts more than estimated in first quarter: govt
WASHINGTON: The US economy contracted more than previously estimated in the first quarter of this year, according to government data released on Thursday, with consumer spending and exports weaker than expected.
US GDP decreased at an annual rate of 0.5% in the first quarter, the Department of Commerce said. This was down from an earlier estimate of a 0.2% decline and below the 2.4% increase recorded in the fourth quarter last year.
The revision follows a surge in imports triggered by President Donald Trump’s sweeping tariffs since his return to the White House earlier this year. Businesses stockpiled goods to get ahead of levies targeting most trading partners—especially Chinese products.
Imports are subtracted in the calculation of GDP, and the overall contraction in the first three months of the year reflected that rise alongside a fall in government spending. These movements were partially offset by gains in consumption and investment.
“The downward revisions to consumer spending and exports drove most of the change in today’s estimate,” the Department of Commerce said, noting that a smaller downward revision to imports partly offset the impact.
In April, Mr Trump imposed a 10% tariff on imports from almost all of the US’s trading partners and announced higher duties on dozens more before pausing their implementation while trade talks continue. A July deadline for the tariffs is approaching, adding to uncertainty in the world’s biggest economy.
The president has also imposed steep levies on steel, aluminium and car imports. His tariff policies have roiled financial markets, snarled supply chains and dragged on consumer sentiment. Economists warn the duties could fuel inflation and weigh on growth, although they have yet to cause widespread price rises.
For now, policymakers are closely monitoring economic data over the summer for the broader effects of the trade measures.
By RSS/AFP
