The U.S. economy unexpectedly shrank by 0.5% annually in the first quarter of 2024, affected by increased imports and a decline in consumer spending. Previously, a slight contraction of 0.2% was reported. Rapid import growth, the fastest since 2020, was driven by businesses and households buying foreign goods ahead of potential tariffs. Consumer spending growth significantly slowed to 0.5% from 4% in the previous quarter. Additionally, federal government spending decreased by 4.6%, marking the largest drop since 2022, contributing to overall GDP contraction.
The U.S. economy contracted at a 0.5% annual rate in Q1 2024, largely due to surging imports and a decline in consumer spending.
This contraction marks the first decline in three years, coinciding with President Trump's trade wars causing business disruptions.
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