The largest contributor to this negative change was the 41.3% growth in imports, as companies and consumers anticipated the imposition of tariffs by the government.
In the United States, GDP data for the first quarter of 2025 was released, showing that the economy registered an annual decline of -0.3%, below the -0.2% estimated by the market consensus and reflecting a decline compared to the 2.4% growth recorded in the fourth quarter of 2024.
The largest contributor to this negative change was the 41.3% growth in imports, as companies and consumers anticipated the imposition of tariffs by the government.
This increase in imports had a strong impact on the trade deficit, which subtracted almost 5 percentage points from GDP, the largest impact on record.
Additionally, a decline in government spending also reduced growth for the period. Consumer spending grew at a rate of 1.8%, better than anticipated, but at the slowest pace since 2023.
However, final sales to private households, a more precise measure of consumption that isolates some of the impacts of international trade and inventories, grew at a rate of 3%, higher than the previous 2.9%.
THIS HAS BEEN THE MARKET REACTION
The US stock market has reacted negatively to data showing that tariff uncertainty is resulting in weaker economic momentum.
The S&P 500 fell by -1.7%, the Nasdaq by -2.3%, and the Dow Jones by -1.3%.
Regarding fixed income, the yield curve is showing moderate declines in the wake of the news, with the 10-year Treasury bond rate falling 1.5 basis points. Finally, the dollar has shown strength, with the DXY rising 0.2% on the news.
HOW IS IT INTERPRETED?
The economy contracted for the first time since 2022, reflecting disruptions associated with uncertainty over the Trump administration's tariff policies.
According to a report by Sura Investments, the baseline scenario is not a recession; the result is in line with our expectation of lower economic growth and corporate profits in 2025.
Additionally, the GDP price index grew at a rate of 3.7% and the underlying index grew at 3.5%, indicating that stagflationary risks remain.
In this context, Sura maintains its neutral stance between equity and fixed-income assets, and given that personal consumption, which represents two-thirds of the US economy, remains resilient, we continue to prefer the United States.
Additionally, he maintains his positive outlook on Japan, given its improved relative position in trade negotiations and strong corporate results.
In fixed income, the company maintains a bias toward longer duration, as they anticipate continued volatility and the Treasury position will provide coverage for portfolios.
