U.S. Q1 GDP growth rate -0.5%...Negative growth for the first time in 3 years

JOON HYOUNG LEE

Summary

The U.S. Department of Commerce announced that the U.S. GDP growth rate in Q1 was -0.5%, marking the first negative growth in three years.
Experts identified a surge in imports and a slowdown in consumer spending as the main factors behind the decline in growth rate.
JPMorgan reported that concerns about stagflation have increased due to tariff policies, and revised its U.S. GDP growth outlook for this year down to 1.3%.

The U.S. economy experienced negative growth in the first quarter of this year for the first time in three years.

The U.S. Department of Commerce announced on the 26th (local time) that the finalized figure for the growth rate of the U.S. Gross Domestic Product (GDP) in the first quarter was -0.5% compared to the previous quarter. This is a downward revision of 0.3 percentage points from the preliminary figure (-0.2%) released last month. The finalized figure reflects economic activity indicators that were missing from the preliminary estimate.

This is the first time in three years that the U.S. Q1 GDP has contracted since the first quarter of 2022 (-1.0%) during the COVID-19 pandemic. Experts point to a surge in imports and a slowdown in consumer spending as the main factors for the decline in growth. U.S. companies significantly increased imports temporarily last quarter to build up inventories amid uncertainty stemming from tariff policies.

Concerns about stagflation (rising prices amid economic stagnation) due to the effects of the tariff policy are also growing. Global investment bank JPMorgan, in a report on the 25th, stated, "The stagflation shock from high tariffs is a downward factor in this year's GDP growth outlook," adding, "The risk of recession remains high." At the start of this year, JPMorgan had forecast U.S. economic growth at 2%, but has now lowered its estimate to 1.3%.

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