US economy contracted 0.2% in Q1 due to lower spending and tariff implications

According to the revised estimate of the US Bureau of Economic Analysis, the country's GDP contracted by 0.2% year-on-year over the first quarter. An earlier estimate indicated a more pronounced drop in the figure (-0.3%).

The latest data showed that consumer spending, the main driver of the US economic expansion, grew by only 1.2%. That's down from the initial estimate of 1.8%. It's also the weakest reading in nearly two years. At the same time, net exports cut the GDP estimate by nearly 5 percentage points, slashing the total in the strongest blow in recorded history.

A slight upward revision to GDP was due to higher business investment and inventory build-up. Meanwhile, federal government spending was not as significant as previously reported.

The economic growth figures for the US are revised repeatedly as new statistics become available, allowing the government to refine the value. The final estimate of the government's GDP growth should be presented in June.

As noted in Bloomberg, the main source of pressure on the US economic growth at the beginning of the year was a sharp increase in imports caused by the tariff policy of President Donald Trump.