Catenaa, Thursday, May 29, 2025– US corporate profits fell by 42% quarter-over-quarter in the first quarter, official data showed on Thursday, and risks from tariffs-related costs could continue throughout the year.
Commerce Department’s Bureau of Economic Analysis (BEA) said that profits from current production with inventory valuation and capital consumption adjustments dropped $118.1 billion last quarter, but profits surged by $204.7 billion in the last quarter of 2024.
Moreover, BEA said in its second estimate of the economy that an increase in pre-tariff imports sent gross domestic product declining at an upwardly revised 0.2% annualized rate in the Q1.
The economy was initially estimated to have contracted at a 0.3% pace. It grew at a 2.4% rate in the fourth quarter. When measured from the income side, the economy also contracted at a 0.2% rate in the first quarter. Gross domestic income (GDI) expanded at a 5.2% pace in the October-December quarter.
The average of GDP and GDI, also referred to as gross domestic output and considered a better measure of economic activity, declined at a 0.2% rate. Gross domestic output grew at a 3.8% pace in the fourth quarter.
President Donald Trump’s sweeping import duties have cast a shadow over the economy, knocking business and consumer sentiment as well as unleashing unprecedented volatility on financial markets.
A US trade court on Wednesday blocked most of Trump’s tariffs from going into effect in a sweeping ruling that the president overstepped his authority. Economists said the ruling, while it offered some relief, had added another layer of uncertainty over the economy.
US stocks rallied on Thursday on the tariff block by the US Court of International Trade as the S&P 500 gained about 0.3%. The Dow Jones Industrial Average hovered near the flatline, while the Nasdaq Composite climbed 0.5%.
