Input Stories

Real GDP decreased at an annual rate of 0.3% in the first quarter of 2025, down from a 2.4% increase in the fourth quarter of 2024 and below consensus expectations of meager growth. The decrease in GDP during the quarter was mostly reflective of an increase in imports, which are a subtraction in the calculation of GDP, and a decline in government spending. This was partially offset by greater investment, consumer spending and exports. Since, by definition, GDP measures domestic output, imports are subtracted from the final calculation since they are reflected in other parts of the equation, such as inventories and consumption.

Consumer spending grew at an annual rate of 1.8%, down from a 4.0% increase in the fourth quarter, with both spending on goods (up 0.5%) and services (up 2.4%) contributing to the gain. Consumer spending on durable goods decreased 3.4% after exhibiting significant growth of 12.4% in the fourth quarter. The decline in consumer spending was led by motor vehicles and parts, with a slight decline in other durable goods. Meanwhile, consumer spending on nondurable goods rose 2.7%, down from 3.1% growth in the fourth quarter. Within services, spending increases were widespread, with health care, housing and utilities being the largest contributors to the increase. The decrease in federal government spending (down 5.1%) was led by an 8.0% decline in defense spending, but nondefense spending was also down 1.0%.

Investment surged 21.9% at an annual rate in the first quarter, driven by a 22.5% increase in business spending on equipment, with information processing equipment being the largest contributor. Meanwhile, business spending on industrial equipment declined. Exports rose 1.8% in the first quarter, with the increase entirely concentrated in goods exports.