The US economy unexpectedly contracted last quarter for the first time since early in the pandemic, The New York Times reports.
The gross domestic product declined by 0.4%, or 1.4% on an annualized basis, in the first three months of 2022, according to Commerce Department data.
The contraction marked the economy’s weakest quarter since the start of the Covid pandemic and was down sharply from 1.7% growth (6.9% annualized) in the final three months of 2021.
Analysts blamed the decline on diminished inventories and international trade, as well as reduced government spending.
But consumer spending continued to grow, rising 0.7%.
“Consumer spending is the aircraft carrier in the middle of the ocean — it just keeps plowing ahead,” said Jay Bryson, chief economist for Wells Fargo.
White House downplays:
“While last quarter’s growth estimate was affected by technical factors, the United States confronts the challenges of Covid-19 around the world, Putin’s unprovoked invasion of Ukraine, and global inflation from a position of strength,” President Joe Biden said Thursday.
Biden noted that “consumer spending, business investment, and residential investment increased at strong rates.”
Republicans blamed Biden for the decline.
“Accelerating inflation, a worker crisis, and the growing risk of a significant recession are the signature economic failures of the Biden administration,” Texas Rep. Kevin Brady said in a statement.
“The Biden administration produced the worst inflation in 40 years, the worst labor shortage in history, and the lowest consumer confidence since the Great Recession,” argued South Carolina Sen. Tim Scott.