US GDP Down 1.4% in First Quarter

Various factors have the US economy off to a less-than-stellar start.

Various factors have the US economy off to a less-than-stellar start.

Following an above-average performance at the end of 2021, a new report from the United States Department of Commerce showed that the country’s GDP had dropped slightly by 1.4% for the first quarter of 2022. This is likely due a combination of factors including newly-rising COVID case numbers, rising commercial prices brought on by supply chain issues and the ongoing Russian invasion of Ukraine, and general investment reluctance.

“In retrospect, this could be seen as a pivotal report,” said Simona Mocuta, chief economist at State Street Global Advisors. “It reminds us of the reality that growth has been great, but things are changing and they won’t be that great going forward.”

Consumer spending is still on the rise, though that may be due more to rising prices than consumer confidence. The US is currently importing more than it’s exporting, and that deficit isn’t doing growth any favors. Even so, analysts are doing their best to remain optimistic that things will bounce back soon enough.

“This is noise; not signal. The economy is not falling into recession,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a memo. “Net trade has been hammered by a surge in imports, especially of consumer goods, as wholesalers and retailers have sought to rebuild inventory. This cannot persist much longer, and imports in due course will drop outright, and net trade will boost GDP growth in Q2 and/or Q3.”

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