U.S. Q1 GDP Growth Rate (Preliminary) -0.2%…Negative Growth for the First Time in 3 Years

Korea Economic Daily

Summary

The preliminary U.S. Q1 GDP growth rate was recorded at -0.2%, surpassing both expert forecasts and the advance estimate but marking negative growth for the first time in 3 years.
Private investment growth rate and import growth rate were revised upward, reducing the contraction, but concerns were raised as personal consumption and private spending growth rates were revised downward.
Experts project a rebound in growth rate in Q2 due to a sharp decline in imports, though they noted that as of Q1, the U.S. economy was contracting faster than expected.

In the first quarter of this year, the U.S. economy recorded negative growth due to a surge in imports stemming from Trump tariffs. However, the extent of contraction was found to be less than the advance estimate.

On the 29th (local time), the U.S. Department of Commerce announced that the preliminary change rate of the U.S. Gross Domestic Product (GDP) for the first quarter was calculated at an annualized -0.2% compared to the previous quarter. This is 0.1 percentage points higher than the advance estimate (-0.3%) released last month.

It also surpassed the expert consensus (-0.4%) compiled by the Dow Jones Industrial Average. This marks the first time in three years that the U.S. economy has seen negative growth on a quarterly basis, since the first quarter of 2022 (-1.0%).

The preliminary figure is calculated by reflecting economic activity indicators that were not included in the advance estimate. The Department of Commerce explained that the adjustment reflected an upward revision in investment. The private investment growth rate was revised upward from the advance estimate (21.9%→24.4%), which helped reduce the extent of the contraction. The import growth rate was also revised up from 41.3% to 42.6%.

The personal consumption growth rate was revised down to 1.2% from the advance estimate (1.8%). The private spending growth rate (final sales to domestic private purchasers), which shows the underlying trend in U.S. economic demand, was also revised down to 2.5% from the advance estimate (3.0%). This is the lowest growth rate in about two years since Q2 2023 (2.5%).

Experts assessed that uncertainty over tariffs led companies to temporarily boost imports to build up inventories, contributing to the Q1 growth slowdown. For the second quarter, they forecast that a sharp drop in imports will result in a significant rebound in the growth rate.

However, concerns are emerging as personal consumption and private spending growth rates have decreased significantly compared to the advance estimate, indicating that the U.S. economy shrank faster than expected in the first quarter.

Sangmi Ahn, Reporter saramin@hankyung.com