U.S. economic growth remained in contraction territory during 2025’s first quarter, and by a considerably larger decline than previous estimates, according to data released June 26 by the Commerce Department.

The Bureau of Economic Analysis’ third estimate report showed that U.S. gross domestic product decreased at an annual rate of 0.5% in January-March, following an initial estimate of down 0.3%, and a second estimate of down 0.2%. It followed healthy 2.4% growth in 4Q24.

GDP was revised down 0.3 percentage points from the second estimate, which reflects downward revisions to consumer spending and exports. However, that was partially offset by a downward revision to imports.

The GDP decrease was driven by a surge in imports — which detract from economic growth — and a decline in government spending. Meanwhile, those factors were partially offset by increases in investments and consumer spending.

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The decrease in real GPD in the first quarter primarily reflected an increase in imports, a deceleration in consumer spending and a decline in government spending. These movements were partially offset by an increase in investments.

According to the Associated Press, economists expected no change in The Commerce Department’s third and final estimate, wherein the department had previously estimated that GDP would decline 0.2% in the first quarter.

The 2Q GDP first estimate will be released in a report issued on July 30.