Minneapolis (CNN Business). According to the Bureau of Economic Analysis, the US economy shrank slightly faster than previously thought in the first quarter. The data amplifies the threat of an impending recession, as economic growth is negative in a quarter of the book.
Real gross domestic product declined from / to / by an annualized rate of 1.6% from January to March, according to the BEA's third and final review for the quarter.
Previously, the advance estimate released in April showed a 1.4% contraction. Last month, that was revised to a 1.5% drop.
Q1 GDP performance, which the BEA says includes some unquantified effects of the pandemic and the surge in the Omicron variant, contrasted with the fourth quarter of 2021, when the economy grew at a rate of 6, 9% compared to the previous quarter.
The first quarter of 2022, however, marked the beginning of the Russian invasion of Ukraine, which caused waves of economic shocks throughout the global supply chain, as well as in the food, financial and energy markets.
Nationwide, inflation in the United States has risen to levels not seen in decades due to continuing supply chain challenges, rising raw material and labor costs, and soaring oil prices.
The BEA attributed the latest decline of 0.1 percentage points to slower-than-expected growth in consumer spending, although this was partially offset by gains in investments in private inventory.
The change in consumer spending estimates puts further emphasis on the latest data from the Personal Consumer Spending Price Index, one of the Federal Reserve's favorite inflation indicators, said Shannon. Ms Seery, an economist at Wells Fargo. The latest report is scheduled for release on Thursday.
Wells Fargo expects a mild recession to occur in the second quarter of 2023, although solid household finances and strong consumer and business balance sheets are expected to maintain such a downturn, if it occurs, tame enough, Ms Seery said.
Although a recession is commonly defined as two consecutive quarters of falling GDP, it's not a hard and fast rule, especially for the people who make the official decision. The National Bureau of Economic Research, the arbiter of US recessions, considers a number of indicators beyond GDP performance and defines a recession as a "significant decline in economic activity that spreads across the economy and lasts more than a few months".
The advance estimate of second quarter GDP performance is expected on July 28th.
Business Standard has always made great efforts to provide up-to-date information and commentary on developments that are of interest to you and that have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering has only strengthened our determination and commitment to these ideals. Even in these difficult times resulting from Covid-19, we continue to remain committed to keeping you informed and up to date with credible news, authoritative opinions and incisive commentary on topical current issues.
We do, however, have a request.
As we fight the economic impact of the pandemic, we need your support even more so that we can continue to offer you higher quality content. Our subscription model has received an encouraging response from many of you who have subscribed to our online content. More subscriptions to our online content can only help us achieve the goal of bringing you even better and more relevant content. We believe in free, fair and credible journalism. Your support through multiple subscriptions can help us practice the journalism we are engaged in.
You must be logged in to post a comment.