• Real GDP fell in the year's first quarter at an annualized rate of 0.3%.
• That doesn't mean a recession, but Americans have been worried one will happen this year.
• The new data shows how the economy has looked in the first three months of Trump's second term.

US real gross domestic product fell at an annualized rate of 0.3% in the first quarter of this year.

The last contraction was in the first quarter of 2022, which triggered fears of a recession that didn't materialize. It's also far below the growth rate of 2.4% in the last quarter of 2024.

"The decrease in real GDP in the first quarter primarily reflected an increase in imports, which are a subtraction in the calculation of GDP, and a decrease in government spending," a Bureau of Economic Analysis news release said. "These movements were partly offset by increases in investment, consumer spending, and exports."

The new report from the Bureau of Economic Analysis showed how the economy has performed during the first three months of President Donald Trump's second presidency. Since the inauguration, the administration has made cuts to the federal government and announced tariffs, including on key trade partners like China and automobiles and some automobile parts.

"Anytime you see a contraction, or the opposite of economic growth, it is a concern," Mark Hamrick, a senior economic analyst at Bankrate, told Business Insider before the GDP release. "But ultimately the question also is about the outlook."

Hamrick added there are global headwinds to the US economy — tariffs and trade. "Tariffs present an upside risk to inflation and a downside risk to employment," he said.

Federal spending fell at a seasonally adjusted annual rate of 5.1% in the first quarter of 2025.

The new report provides insight into how businesses prepared for tariffs. While imports increased 41.3%, exports increased 1.8%.

Personal consumption expenditures also increased 1.8%, a smaller gain than in the last quarter of 2024. Gross private domestic investment climbed 21.9% in the first quarter, with fixed investment in equipment surging 22.5% after a decline in the last quarter of 2024.

Stock futures were down after the report.

"While the softer Q1 GDP figures were likely significantly skewed to the downside by the record widening of the U.S. trade deficit, the economic outlook remains pessimistic and uncertain," Ryan Weldon, investment director and portfolio manager at IFM Investors, said.

Weldon added that the "negative impacts of the current tariff policy will only compound every day there are no resolutions, as imports stagnate on tepid demand and small and medium businesses are forced to make tough decisions on employment."

Several hard data measures haven't reflected policy changes just yet. Still, the back and forth on tariff announcements and suspensions have contributed to people feeling worried or like they must spring into action, which has been reflected in some recent data.

In March, retail sales increased at motor vehicles and parts dealers. Consumers could face higher prices there and other areas of the economy as dealerships and business owners make tariff-related decisions. Inflation has continued to slow down, but people are worried that it could accelerate because of tariffs. Hamrick said the "economy is being affected by both the perceived and anticipated impacts of tariffs."

David Kelly, chief global strategist at J.P. Morgan Asset Management, said in a note before the GDP release that "without a quick resolution to the trade war, imports, exports and inventories all look set to fall sharply." He added people may slow down on making purchases, and companies may make some business changes like scaling back on hiring.

"Further federal cutbacks should prevent an overall government spending bounce-back, while tourism will likely be hit by the international reaction to the Administration's policies," Kelly said. "Given all of this, real GDP growth could be very slow, or even negative, over at least the first three quarters of 2025."

Wednesday's release reflects an advance estimate, so there's a chance real GDP could be revised in the coming months. While the new GDP report doesn't mean a recession, there are concerns about how the economy will evolve. "This is a huge wildcard in the face of a high degree of uncertainty felt by consumers and business leaders all of which undermines their ability to make decisions including on spending which would lend support to the economy," Hamrick said.

• The US economy grew more slowly in the fourth quarter of 2024.
• Real GDP increased at an annualized rate of 2.3%, below the forecast of 2.7%.
• Economists think the economy was strong in 2024 and the chance of a recession in 2025 is low.

US real gross domestic product increased at an annualized rate of 2.3% in the fourth quarter, well below the forecast of 2.7%.

That growth indicates a cooler economy than in the second and third quarters of the year.

"Compared to the third quarter, the deceleration in real GDP in the fourth quarter primarily reflected downturns in investment and exports," the Bureau of Economic Analysis said on Thursday.

Gross private domestic investment fell at a seasonally adjusted annual rate of 5.6% in the fourth quarter after rising by 0.8% in the third quarter.

Consumer spending largely accounted for the overall real GDP growth in the fourth quarter. Personal consumption expenditures increased at a seasonally adjusted annual rate of 4.2%, compared with 3.7% in the third quarter.

While the overall growth in the fourth quarter was cooler than in the second and third quarters of 2024, the 2.3% figure is an advance estimate, so it could change.

Real GDP growth for the full year was on par with the previous year's increase. Real GDP rose by 2.8% in 2024, compared with 2.9% in 2023.

Scott Helfstein, the head of investment strategy at Global X, said the GDP figures "provide further justification for the Fed pause." The Federal Reserve held interest rates steady this week after several consecutive rate cuts in 2024.

"The economy continues to grow at a healthy rate despite higher interest rates," Helfstein said. "While investment cooled a little, that was offset by a pickup in consumption around the holidays. Seems like a good time to ride the wave."

Matt Colyar, an economist for Moody's Analytics, told Business Insider before the publication of the new GDP data that the 2024 economy was strong.

"Inflation is still above the Fed's target but moderated throughout the year, and this happened without any meaningful increase in joblessness," Colyar said. "The increase in the unemployment rate was driven by an increase in labor supply. This helped ease some of the inflationary pressure coming from the labor market via wage growth."

Average monthly job growth was 186,000 in 2024, personal spending continued to climb, and a recession was avoided.

While it's still early in the year and President Donald Trump's second term has just begun, Elizabeth Renter, a senior economist at NerdWallet, argued that the risk of a recession this year is low.

"The issue is there is much we don't know right now about how the year will unfold," Renter said in a statement to BI. "Some potential policies, such as tariffs, stand to be inflationary. Others, such as those that could reduce the workforce, may slow economic growth. Most potential economic policies will take time to implement, and even more time to influence the economy, so my outlook for the 2025 economy remains on solid footing."

Colyar said Moody's Analytics expected cooler GDP growth this year.

"We expect growth slows closer to 2% in 2025 and is a little bit stronger than that in the first quarter," Colyar said. "That's not a concerning number. Consumers have grappled with higher inflation, and there are some budding signs that people are pulling back."