US first quarter GDP 0.5% negative growth…Announcement of confirmed figures weaker than expected

Economy of Trump's Second Term Starting with Poor Performance (Source: NBC News)

The US economy contracted by 0.5% on an annualized basis in the first quarter of 2025. On the 25th (local time), the US Department of Commerce announced the final figure for the Gross Domestic Product (GDP), stating that the US economy recorded negative growth compared to the previous quarter. This figure falls short of the market expectation of -0.2%.

This announcement, confirmed after preliminary and provisional figures, suggests the possibility that the US economy has entered a full-fledged slowdown phase.

It is analyzed that a high-interest rate environment, consumption slowdown, and corporate investment shrinkage have collectively acted to brake the growth rate. Especially, as this is a key indicator to gauge the Federal Reserve's interest rate policy direction, this poor result is likely to support the prospect of a policy rate cut within the year.

In the market, there are observations that if economic momentum does not recover in the next quarter, the Federal Reserve may be quicker to engage in monetary easing.