The U.S. economy shrank at an annual rate of 0.3% from January to March, marking its first contraction in three years. This downturn was attributed to a surge in imports, as businesses tried to stock up on foreign goods before impending tariffs imposed by President Trump. Consumer spending sharply declined, and federal government expenditure fell by 5.1%. However, business investment soared by 21.9%, and a measure of the economy's underlying strength increased at a healthy 3%, suggesting resilience in certain sectors amidst trade uncertainties.
The U.S. economy shrank at a 0.3% annual pace from January through March, marking the first drop in three years due to increased imports and reduced consumer spending.
Imports sidelined domestic growth, pulling down GDP as businesses rushed to stock foreign goods ahead of impending tariffs. This contributed significantly to slow economic activity.
While consumer spending decreased significantly and federal spending plunged 5.1%, business investment surged by 21.9%, revealing a complex economic landscape.
A key measurement of the economy's core strength showed a healthy rise of 3% annual rate, indicating some resilience amidst trade policy uncertainties.
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