US economy shrank 0.5% between January and March, worse than 2 earlier estimates had revealed

By PAUL WISEMAN Associated Press WASHINGTON The U S market system shrank at a annual pace from January through March as President Donald Trump s deal wars disrupted business the Commerce Department revealed Thursday in an unexpected deterioration of earlier estimates First-quarter advance 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 market system fell in the first quarter Economists had forecast no change in the department s third and final estimate Related Articles Big East Bay retail mall lands buyer in million-plus property deal Kroger plans to close US stores in months to improve profits Fed s Powell repeats warning about tariffs as particular GOP senators accuse him of bias San Jose airport customer trips remain lower than pre-COVID numbers Sky-high housing prices spur San Jose charter school default The January-March drop in gross domestic product the nation s output of goods and services reversed a increase in the last three months of and marked the first time in three years that the market system contracted Imports expanded fastest since and pushed GDP down by nearly percentage points Consumer spending also slowed sharply expanding just down from a robust in fourth-quarter and sharp downgrade from the Commerce Department s previous estimate A category within the GDP facts that measures the business sector s underlying strength rose at a annual rate from January through March It s a decent number but down from in the fourth quarter of and from the Commerce Department s previous estimate of January-March advance This category includes consumer spending and private resources but excludes volatile items like exports inventories and governing body spending Ryan Sweet of Oxford Economics called the downgrade in that figure troubling though he doesn t expect to make a considerable change to his near-term economic forecast And federal administration spending fell at a annual pace the biggest drop since Pact 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 overview as consumer spending or business financing 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 second-quarter improvement to bounce back to in the second quarter according to a survey of forecasters by the material firm FactSet The first look at April-June GDP advance is due July This story has been corrected to show that the drop in federal spending was the biggest since not