US GDP for Q1 2025 falls by 0.3% creating stagflation worries as Bitcoin trades flat on news

US GDP contracted at an annual rate of 0.3% in the first quarter, the Commerce Department said in its advance estimate today.

Real final sales to private domestic purchasers, a measure of underlying demand, advanced 3.0% after a 2.9% rise. The price index for gross domestic purchases quickened to 3.4%. The personal consumption expenditures price gauge rose 3.6%; the core measure, which strips out food and energy, was up 3.5%.

Bea stated,

“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.”

This means that a reduction in government spending and front-running of imports due to tariff fears has led to a mathematical fall in GDP. However, this is not simply a story of politics, as public consumption also fell 2.2%. The optics are poor, and when the actual tariff impact plays out in Q2, we could see a further decline, signaling a recession.

The reading follows a 2.4% pace in the fourth quarter of 2024 and a median forecast of 0.4 percent. BEA’s estimate will be revised on May 29 and June 26.

US GDP (Source: bea.gov)

Trading Economics forecasted 0.5% growth while the general consensus was 0.3%.

On the news, Trading Economics adjusted its Q2 forecast to -0.3%, indicating a technical recession is now very likely. The odds of a recession in the Polymarket jumped to 71%.

[Update 15.00 BST: TE initially forecast -1.2% as GDP data was released, but seems to have now revised it to -0.3%]

US recession (Source: Polymarket)

Before the release, Bitcoin, oil, and equities dipped slightly while gold ticked up.

As the data was released, Bitcoin fell 0.5% on the news, with S&P 500 futures falling 0.77% and US 10-year Treasury yields rising 0.35%.

[Update 15.00 BST: As the US stock market opened, Bitcoin fell around 2%, gold rose 0.5%, and the S&P 500 lost 1.05%.]

Real-time trackers diverged ahead of the release: the Atlanta Fed’s GDPNow model pointed to -2.7% as of April 29, while the New York Fed’s Staff Nowcast stood at 2.6 percent. Consensus has shifted repeatedly as soft manufacturing data offset firmer housing and services prints.

The post US GDP for Q1 2025 falls by 0.3% creating stagflation worries as Bitcoin trades flat on news appeared first on CryptoSlate.