U.S. Economy Contracts in Q1 for the First Time Since 2022

In a surprising turn, the U.S. economy contracted in the first quarter of 2025, marking the first quarterly decline in GDP since 2022. According to preliminary data released today, gross domestic product fell by a modest margin, raising concerns about the resilience of the post-pandemic recovery.

Economists point to a mix of declining consumer spending, reduced business investment, and ongoing global uncertainties—including high interest rates and geopolitical tensions—as key contributors to the slowdown. While the job market remains relatively strong, signs of cooling demand are becoming more evident across sectors.

This contraction may prompt the Federal Reserve to reconsider its current monetary policy trajectory. Market watchers are already speculating whether interest rate cuts could be back on the table sooner than expected.

If the negative trend continues into Q2, fears of a potential recession may resurface, putting pressure on policymakers to act swiftly.

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