For the first time in nearly four years, the nation’s Gross Domestic Product is on the downside, posting a 0.3% decline for early 2025.
So says a new survey compiled by the Bureau of Economic Analysis, which notes that investment in manufacturing structures is off by a significant 4.5% since late last year.
The 0.3% overall decline is particularly notable given that GDP experienced a healthy 2.4% increase during the final quarter of 2024.
The 0.3% decline, says the report, is largely attributable to an “upturn in imports, a deceleration in consumer spending, and a downturn in government spending that was partly offset by upturns in investment and exports.”
That decrease in government spending was particularly due to a decline in defense consumption expenditures. But the figures in this category could have been worse were it not for an early year increase in state and local government spending.
Matters were also not helped by the big wildfires in big California earlier this year which, says the report, “disrupted consumer and business activities and promoted emergency services and remediation activities.”
In all, the Bureau of Economic Analysis says that the California wildfires caused losses in the neighborhood of $34 billion in privately owned fixed assets, along with another $11 billion in state and local government-owned fixed assets.
Looked at in a larger context, the 0.3% GDP decline appears marginal compared with the 4.6% drop for the covid year of 2020; and the 3.8% decline recorded in 2022.
May 6, 2025
By Garry Boulard
