Key Takeaways

The U.S. economy has broken its three-year streak of steady growth.

The nation's economic output, as measured by Gross Domestic Product, shrank at an annual rate of 0.3% in the first quarter, according to the Bureau of Economic Analysis. It's the first time the widely watched measure of the economy has shrunk since the first quarter of 2022. That's a sharp downturn from the previous quarter, when the economy grew at an annual rate of 2.4%.

The slowdown highlights the impact of tariffs: it was mainly due to a surge of imports in recent months, as companies and individuals raced to buy foreign products before President Donald Trump's tariffs made them more expensive. Every dollar spent on imports drags down the GDP because of how the figure is calculated.

Aside from imports, other measures of economic strength were healthy: consumer spending, the main engine of the U.S. economy, rose at a 1.8% annual rate, and investment surged 21.9%, led by a 22.5% jump in equipment purchases.

Wednesday's GDP figure was a preliminary estimate and will be revised twice in future months before being finalized.

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