Second GDP Verse Same As The First

Still Reasons To Smile And Reasons To Frown In First Quarter GDP Estimate

The second estimate for the nation’s Gross Domestic Product during the First Quarter of 2025 was largely a repeat of the advance estimate.

As with the first estimate, there were reasons to smile and there were reasons to frown.

Real gross domestic product (GDP) decreased at an annual rate of 0.2 percent in the first quarter of 2025 (January, February, and March), according to the second estimate released by the U.S. Bureau of Economic Analysis. In the fourth quarter of 2024, real GDP increased 2.4 percent.

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

Real GDP was revised up 0.1 percentage point from the advance estimate, reflecting an upward revision to investment that was partly offset by a downward revision to consumer spending.

In the second estimate, investment was found to have been larger than in the advance estimate. In direct consequence, the decline in real GDP was 0.1 percentage points less than originally thought.

The decline is still due entirely to a surge in imports, a reaction to the Trump Administration’s banging the tariff drum since the first day of Donald Trump’s Presidency.

Even with the import surge—which is treated as a reduction in GDP—Real GDP still posted a 2% increase year on year.

One definite reason to smile: nominal personal income and disposable personal income rose during the first quarter, while nominal personal consumption expenditures fell.

For the first time in a year, real disposable personal income rose while real consumption expenditures fell.

Another small encouragement: Federal expenditures declined quarter on quarter, while federal receipts rose.

Thank you Elon Musk and DOGE.

The actual changes from the first estimate were incremental and therefore relatively small, and all of the pain points from that first estimate remain pain points the second time around.

Is the Economy Really In Reverse? Think Again

Broadly speaking, the assessment of the US economy is still the same: there are still reasons to smile and there are still reasons to fround in the First Quarter GDP Estimate.