Skip to main content

Posts

Showing posts with the label Q1 PCE moves higher

Q1 US GDP Contraction | Core PCE Moves Higher

 ​ The U.S. economy contracted by 0.3% in the first quarter of 2025—the first decline since early 2022—while core inflation accelerated, raising concerns about stagflation. ​ 📉 Q1 2025 GDP Contraction: What Happened? GDP fell 0.3% on an annualized basis, reversing the 2.4% growth in Q4 2024. The primary driver was a 41.3% surge in imports as businesses rushed to stockpile goods ahead of President Trump's new tariffs, which subtracted over 5 percentage points from GDP. Consumer spending slowed to a 1.8% growth rate, down from 4% in Q4 2024, with durable goods spending declining by 3.4%. Federal government spending decreased by 5.1%, partly due to budget cuts implemented by the Department of Government Efficiency. Business investment rose by 21.9%, likely driven by preemptive purchases ahead of the tariffs. 📈 Inflation: Core PCE Re-Acceleration The core Personal Consumption Expenditures (PCE) price index —the Federal Reserve's preferred inflation me...