Why Did the US Economy Shrink in Early 2025?: QuickTake

What’s the single best way to measure the health of a country’s economy? For most experts, there is little debate that gross domestic product, a quarterly tally of all the goods and services a country produces, is the gold standard for assessing and comparing economic activity.

On April 30, the Commerce Department released its initial estimate of GDP in the first quarter of 2025. Inflation-adjusted GDP decreased at an annualized 0.3% rate, well below the average growth of about 3% in the prior two years. It was the first quarterly contraction since 2022.

The biggest restraint on growth was a ...