US economy contracts more than estimated in first quarter

[WASHINGTON] The US economy contracted more than previously estimated in the first three months this year, according to government data released on Thursday (Jun 26), with consumer spending and exports weaker than expected.

US GDP decreased at an annual rate of 0.5 per cent in the first quarter, according to the Department of Commerce.

This was down from an earlier estimate of a 0.2 per cent decline, and lower than the 2.4 per cent increase in the fourth quarter last year.

The data came after an import surge that was triggered by US President Donald Trump’s sweeping tariffs since returning to the White House this year.

Businesses had stockpiled goods to try and get ahead of Trump’s levies targeting most trading partners – especially goods from China.

Imports are a subtraction in the calculation of GDP.

But the revision on Thursday mainly reflected “downward revisions to consumer spending and exports,” said the Commerce Department.

This was partly offset by a downward revision to imports, the department added.

While Trump has backed off or postponed some of his most punishing trade salvos as trade negotiations are ongoing, a July deadline approaches for higher tariff levels to kick in for dozens of economies – adding to uncertainty in the economy. AFP