The US economy shrank slightly less than initially expected in the first quarter of this year, but ongoing uncertainty over US trade policy under President Donald Trump's second term continued to weigh on the country's economic activity.
US gross domestic product (GDP), a leading indicator of the world's largest economy, shrank by 0.2% in the January-March period, according to a second estimate released by the US Department of Commerce's Bureau of Economic Analysis (BEA) on Thursday. The previous preliminary estimate showed a 0.3% contraction in the first quarter, after recording 2.4% growth in the fourth quarter of last year.
The BEA said the decline in real GDP in the first quarter was mainly due to an increase in imports, which are counted as a reduction in GDP calculations, as well as a reduction in government spending. However, this impact was partially offset by increases in investment, consumer spending and exports.
Analysts at S&P Global Market Intelligence explained that the preliminary figures are “generally understood to underestimate the true pace of US economic growth,” but still suggest that the economy is weakening while price pressures are building.
They added that preliminary PMI data for May showed a slight improvement in growth and business confidence compared to April, but both indicators remain weak by normal levels. Overall, this points to an annual US GDP growth rate of just 1% in the second quarter, well below trend.
