An update on gross domestic product (GDP) showed a sharp drop in growth with the US economy contracting at an annual rate of 0.3% in the first quarter, according to an advanced estimate released by the US Bureau of Economic Analysis on Wednesday.

Economists had expected a drop to 0.1% growth. In the fourth quarter of 2024, real GDP increased 2.4%.

The decrease primarily reflected an increase in imports as Trump’s tariff push rattled confidence and businesses rushed to stockpile.

Along with an uptick in imports, the BEA said a deceleration in consumer spending and a downtick in government spending also added pressure to the reading. Compared to the fourth quarter, these were partly offset by upturns in investment and exports.

Pricing pressures also escalated.

The personal consumption expenditures (PCE) price index increased 3.6%, compared to an increase of 2.4% in the prior quarter. Excluding food and energy prices, the PCE price index jumped 3.5%, an acceleration from the 2.6% increase in Q4.