The U.S. Department of Commerce reported on the 29th (local time) that the preliminary growth rate of the country's gross domestic product (GDP) for the first quarter is -0.2% (annualized compared to the previous quarter).
This figure is 0.1 percentage points higher than the previously announced flash estimate (-0.3%) and exceeds the market forecast compiled by Dow Jones (-0.4%).
The Department of Commerce cited increased investment as the background for this upward revision. However, personal consumption expenditure was downgraded from the flash estimate.
The GDP preliminary figure is calculated by reflecting additional economic indicators that were not included at the time of the flash estimate announcement.
It is the first time in three years that the U.S. economy has recorded a quarterly contraction, following the first quarter of 2022 (-1.0%).
According to the U.S. Department of Commerce, the growth rate of private investment for the first quarter was revised upward to 24.4%, higher than the flash estimate (21.9%). This contributed to reducing the contraction. In particular, the expansion in the institutional sector of equipment investment was greater than initially estimated.
However, the growth rate of personal consumption, which is a key pillar of the U.S. economy, was revised down from 1.8% to 1.2%.
The increase in imports, identified as the main cause of negative growth in the first quarter, was revised upward from 41.3% to 42.6%. The growth rate of private expenditure, which is an indicator of the fundamental strength of the U.S. economy (final consumption of domestic private purchasers), also fell from 3.0% to 2.5%. It marks the lowest figure in about two years since the second quarter of 2023. This is interpreted as evidence that domestic demand in the U.S. was weaker than expected.
Some analysts noted that uncertainties surrounding the tariff policy of the Trump administration stimulated corporations' inventory accumulation sentiment, leading to a temporary surge in imports and a subsequent drop in growth rates. They expect the growth rate to rebound in the second quarter due to the adjustment effects of imports.
Economic experts also predict that the trend of protectionism is dampening consumer and corporation sentiment, increasing the risk that the U.S. will enter a recession.