U.S. economic growth remained in contraction territory during 2025’s first quarter, according to data released May 29 by the Commerce Department, but by a slightly smaller decline than the government’s original estimate.

The Bureau of Economic Analysis’ second estimate report showed that U.S. gross domestic product decreased at an annual rate of 0.2% in January-March, following an initial estimate of down 0.3%. It followed and a healthy 2.4% growth in 4Q24.

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GDP was revised up 0.1% from the initial estimate, which reflects an increase in investments. However, that was partially offset by a decrease in consumer spending — reflecting a decline in services and goods.

The GDP decrease was driven by a surge in imports — which detract from economic growth — and a decline in government spending. Meanwhile, those factors were partially offset by increases in investment, consumer spending and exports.

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The decrease in real GDP in the first quarter primarily reflected an increase in imports, which is a subtraction in the calculation of GDP, and a decline in consumer and government spending. These movements were partly offset by increases in investments and exports.

Before the Bureau’s first estimate was released on April 30, economists polled by the Wall Street Journal and other media outlets had expected 1Q GDP growth of 0.4%.

The 1Q GDP estimate will be revised in a third report issued on June 26.