The January-March drop in gross domestic product — the nation’s output of goods and services — reversed a 2.4% increase in the last three months of 2024 and marked the first time in three years that the economy contracted. Imports expanded 37.9%, fastest since 2020, and pushed GDP down by nearly 4.7 percentage points.

The government said that first-quarter gross domestic product fell by 0.5%, more than economists had predicted.

New GDP data shows the U.S. economy shrank at an 0.5% annual pace from January through March, the first quarterly drop in three years.