Earlier, it was reported that the U.S. economy contracted by 0.3%; the 0.1 percentage point revision reflects an upward revision to investment that was partly offset by a downward revision to consumer spending.

U.S. GDP shrank at an annual rate of 0.2% in the first quarter of 2025, according to the second estimate released by the Bureau of Economic Analysis (BEA), confirming the contraction in the economy as reported earlier.

The decrease reflected a jump in imports and a decline in government spending, which was partly offset by increases in investment, consumer spending, and exports.

In comparison, the GDP rose 2.4% in the fourth quarter of 2024.

Earlier, it was reported that the U.S. economy contracted by 0.3% in the first quarter of 2024. The 0.1 percentage point revision reflects an upward revision in investment that was partly offset by a downward revision in consumer spending.

The BEA also reported that real gross domestic income (GDI) fell 0.2% in the first quarter, in contrast to an increase of 5.2% in the fourth quarter.

Trump’s tariff policies have been a big drag on the economy in recent times, with many companies withdrawing their outlooks due to uncertainties and announcing layoffs.

According to a Financial Times report, the International Monetary Fund (IMF) recently reduced its outlook for U.S. GDP to 1.8% from 2.7% in January.

Meanwhile, a federal trade court on Wednesday blocked the “Liberation Day” tariffs and asked the Trump administration to stop collecting them.

The court said the administration exceeded the authority granted by the International Emergency Economic Powers Act in imposing the levies.

Markets reacted positively on Thursday following the development. The SPDR S&P 500 ETF Trust (SPY), which tracks the S&P 500, traded 0.64% higher on Thursday, while the Invesco QQQ Trust, Series 1 (QQQ), which tracks the Nasdaq Composite, was up 0.82%.

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