U.S. economy shrinks 0.5% in Q1, 1st contraction in 3 years
The U.S. economy shrank at a 0.5 per cent annual pace from January through March as President Donald Trump's trade wars disrupted business, the Commerce Department reported Thursday in an unexpected deterioration of earlier estimates.
First-quarter growth was weighed down by a surge of imports as U.S. companies, and households, rushed to buy foreign goods before Trump could impose tariffs on them. The Commerce Department previously estimated that the economy fell 0.2 per cent in the first quarter. Economists had forecast no change in the department's third and final estimate.
The January-March drop in gross domestic product — the nation's output of goods and services — reversed a 2.4 per cent increase in the last three months of 2024 and marked the first time in three years that the economy contracted. Imports expanded 37.9 per cent, fastest since 2020, and pushed GDP down by nearly 4.7 percentage points.
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Consumer spending also slowed sharply, expanding just 0.5 per cent, down from a robust four per cent in the fourth-quarter of last year. It is a significant downgrade from the Commerce Department's previous estimate.
Consumers have turned jittery since Trump started plastering big taxes on imports, anticipating that the tariffs will impact their finances directly.
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And the Conference Board reported this week that Americans' view of the U.S. economy worsened in June, resuming a downward slide that had dragged consumer confidence in April to its lowest level since the COVID-19 pandemic five years ago.
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Canada on track for 'mild recession' this year: Deloitte
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The Conference Board said Tuesday that its consumer confidence index slid to 93 in June, down 5.4 points from 98.4 last month. A measure of Americans' short-term expectations for their income, business conditions and the job market fell 4.6 points to 69. That's well below 80, the marker that can signal a recession ahead.
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Former Federal Reserve economist Claudia Sahm said 'the downward revision to consumer spending today is a potential red flag.' Sahm, now chief economist at New Century Advisors, noted that Commerce downgraded spending on recreation services and foreign travel — which could have reflect 'great consumer pessimism and uncertainty.'
A category within the GDP data that measures the economy's underlying strength rose at a 1.9 per cent annual rate from January through March. It's a decent number, but down from 2.9 per cent in the fourth quarter of 2024 and from the Commerce Department's previous estimate of 2.5 per cent January-March growth.
This category includes consumer spending and private investment but excludes volatile items like exports, inventories and government spending.
And federal government spending fell at a 4.6 per cent annual pace, the biggest drop since 2022.
In another sign that Trump's policies are disrupting trade,
Trade deficits reduce GDP. But that's just a matter of mathematics. GDP is supposed to count only what's produced domestically, not stuff that comes in from abroad. So imports — which show up in the GDP report as consumer spending or business investment — have to be subtracted out to keep them from artificially inflating domestic production.
The first-quarter import influx likely won't be repeated in the April-June quarter and therefore shouldn't weigh on GDP. In fact, economists expect growth to bounce back to three per cent in the second quarter, according to a survey of forecasters by the data firm FactSet.
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The first look at April-June GDP growth is due July 30.
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We cannot negotiate with the melting point of ice, is one of the bottom lines of the report from the International Cryosphere Climate Initiative, which includes scientists from the Intergovernmental Panel on Climate Change (IPCC) and WMO's Global Cryosphere Watch network. These new findings corroborate recent WMO State of the Global Climate and State of Global Water Resources reports which also have also highlighted the alarming melting affecting the cryosphere. A glacier is a large accumulation of mainly ice and snow, that originates on land and flows slowly through the influence of its own weight. Glaciers are found on every continent. They exist in many mountain regions and around the edges of the Greenland and Antarctic ice sheets. There are more than 200 000 glaciers in the world, covering an area of around 700 000 km2 (RGI, 2023). Glaciers are considered as important water towers, storing about 158 000 km3 of freshwater (Farinotti et al., 2019). Glaciers are a source of life, providing freshwater to people, animals and plants alike. Okjkull (Icelandic pronunciation: [kjktl], Ok glacier) was a glacier in western Iceland on top of the shield volcano Ok.[2] Ok is located north-east of Reykjavik. The glacier was declared dead in 2014 by glaciologist Oddur Sigursson due to its loss of thickness. The plaque was installed on August 18, 2019,[5] with an inscription written by Andri Snr Magnason, titled A letter to the future , in Icelandic and English. The English version reads: Ok is the first Icelandic glacier to lose its status as a glacier. In the next 200 years all our glaciers are expected to follow the same path. This monument is to acknowledge that we know what is happening and what needs to be done. Only you know if we did it. Impact Glaciers and ice caps are critical for sustaining ecosystems and human livelihoods. They provide essential meltwater runoff during dry seasons, supporting drinking water, agriculture, industry, and clean energy production, making these frozen reservoirs vital for global water resources. Climate and cryosphere changes, however, are disrupting the water cycle, altering the amount and timing of glacier melt, causing knock-on impacts on water resource availability while also contributing to sea-level rise. As glaciers continue to shrink and snow cover diminishes, less water will be available for communities, particularly in seasonally dry regions. Increased competition for water resources is expected, with regions like China, India, and the Andes among the most vulnerable. Glaciers that have surpassed their "Peak Water" point-the stage at which meltwater runoff reaches its maximum-will gradually provide decreasing contributions to downstream water supplies, intensifying challenges for water security. Over the past century, despite representing only 0.5% of global land surface area, glaciers have contributed more to sea-level rise than the Greenland and Antarctic ice sheets. Between 2000 and 2023, glaciers are estimated to have lost an average mass of approximately 273 billion tonnes per year, which is equivalent to approximately 0.75 mm per year of global sea-level rise (The GlaMBIE Team, 2025). The continuous retreat of glaciers signals the growing impacts of global warming and creates new hazards while intensifying existing ones. For example, melting glaciers are increasing the risk of hazards such as glacier lake outburst floods, ice avalanches and glacial debris flows, posing dangers to local and downstream communities. However, risk assessments are often not possible due to an absence of data (IPCC, 2019). Therefore, increased observation of the cryosphere is critical for effectively forecasting the impacts of cryosphere-related hazards. ___________________________________________ Source: (1) Cryospheric : The cryosphere is an umbrella term for those portions of Earth's surface where water is in solid form. This includes sea ice, ice on lakes or rivers, snow, glaciers, ice caps, ice sheets, and frozen ground (which includes permafrost). Source: Pressenza
