US personal income and consumer spending report anticipated on bea.gov/news/2025/pers.

US personal income and consumer spending report anticipated on bea.gov/news/2025/pers.

The U.S. economy contracted more sharply than initially estimated in the first quarter of 2025, according to the latest report from the Commerce Department's Bureau of Economic Analysis (BEA). The revised Gross Domestic Product (GDP) decreased at an annualized rate of 0.5%, marking a significant downward revision from the previously reported 0.2% pace [1].

The primary driver behind this revision was a sharp downgrade in consumer spending, which is now estimated to have increased at a mere 0.5% rate instead of the previously reported 1.2% rate. This slowdown in consumer spending, coupled with a decrease in domestic demand growth to 1.9% from the previously reported 2.5%, underscores the economic challenges facing the nation.

The economy's contraction was further exacerbated by a flood of imports as businesses rushed to bring in goods before President Donald Trump's sweeping tariffs kicked in. The surge in imports, which accounted for the bulk of the decrease in GDP, has since subsided, positioning the economy for a potential rebound in the second quarter. The Atlanta Federal Reserve forecasts GDP to accelerate at a 3.4% rate this quarter [1].

However, economists caution against interpreting this anticipated rebound as a sign of economic strength. Data on retail sales, the housing market, and labor markets have suggested that economic activity is softening. The difficulty of accurately capturing the distortions caused by the Trump administration's tariffs on imported goods has created significant measurement challenges, as noted by Lou Crandall, chief economist at Wrightson ICAP [1].

When measured from the income side, the economy grew at an upwardly revised 0.2% rate in the first quarter. Gross Domestic Income (GDI) was initially estimated to have declined at a 0.2% pace but was revised upward to reflect an increase in corporate profits. The average of GDP and GDI, also known as gross domestic output, dropped at an upwardly revised 0.1% rate [1].

The U.S. personal income and consumer spending report, anticipated to be released on June 29, 2025, by the BEA, will provide further insights into the state of the consumer economy and its impact on overall economic growth [2].

References:

[1] https://www.tradingview.com/news/reuters.com,2025:newsml_L1N3SS0YT:0-us-first-quarter-gdp-revised-lower-on-tepid-consumer-spending/

[2] https://www.bea.gov/news/2025/pers