First-Quarter GDP Revised Down as Consumer Spending Growth Weakens

11:32 AM EDT, 06/26/2025 (MT Newswires) -- The US economy contracted more than previously estimated in the first quarter as consumer spending weakened, a final estimate released Thursday by the Bureau of Economic Analysis showed.

Real gross domestic product in the world's largest economy shrank at a 0.5% annualized rate in the March quarter, worse than the 0.2% decline projected earlier. The consensus was for the contraction rate to be left unrevised, according to a survey compiled by Bloomberg.

In the fourth quarter, real GDP grew 2.4%.

The latest GDP reading still represents the first quarterly decline in three years.

The growth in consumer spending -- as measured by personal consumption expenditures -- was downwardly revised to 0.5% from the previous 1.2% estimate, which Wall Street expected would be left unchanged.

"Consumers tightened their wallets a lot more than initially anticipated in the first three months of the year as tariff uncertainty weighed," BMO Capital Markets Senior Economist Priscilla Thiagamoorthy said in a note.

Headline PCE inflation in the first quarter was revised to 3.7% from 3.6%. Core PCE inflation -- which excludes the volatile food and energy components -- was adjusted to 3.5% from 3.4%, government data showed.

Earlier this month, the Organization for Economic Co-operation and Development and the World Bank lowered their economic growth projections for the US amid trade tensions and policy uncertainty.

After announcing sweeping reciprocal tariffs early in April, US President Donald Trump announced a 90-day pause on certain levies for non-retaliating countries. Earlier in June, the US and China agreed on a framework for implementing a pact that the two countries reached in Switzerland last month.

On Tuesday, Federal Reserve Chair Jerome Powell said the US economy is in a "solid position" despite elevated uncertainty levels, and that the central bank can continue to wait and evaluate how the economy responds to policy changes before it adjusts monetary policy.

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