The U.S. economy confirmed signs of fragility in early 2025, as gross domestic product slipped into negative territory, while latest unemployment benefits surged to the highest levels since 2021, suggesting headwinds for growth and hiring.
GDP Contracts, Corporate Profits Slide
In the first quarter of 2025, the U.S. gross domestic product shrank at an annualized rate of 0.2%, according to the second estimate by the Bureau of Economic Analysis. While the figure marks a slight upward revision from the initial 0.3% drop reported in April, it remains a sharp slowdown from the 2.4% expansion recorded in the final quarter of 2024.
The downturn was largely driven by a spike in imports, as companies raced to secure goods ahead of Donald Trump‘s trade tariffs—a factor that subtracts from GDP in its calculation. Meanwhile, federal spending declined following cost-cutting mandates by the Department of Government Efficiency, led by Elon Musk.
Consumer spending, the main engine of the U.S. economy, rose just 1.2% on an annualized …