The US economy is “resilient”, claims Biden, despite the unexpected drop in GDP
US growth suffered an unexpected halt in the first quarter, with gross domestic product even contracting by 1.4%, but the economy “remains resilient”, said Joe Biden, citing “technical factors” to explain this downturn.
The Gross Domestic Product of the world’s largest economy fell at an annualized rate, ie projected at this rate over the year. Compared to just last quarter, the decline is 0.4%, according to Commerce Department data. Analysts predicted growth of 1.1%.
“The United States faces the challenges of Covid-19 around the world, the unwarranted invasion of Ukraine by (Russian President Vladimir) Putin and global inflation,” the US president said in a statement. .
The first quarter nevertheless marks a clear reversal of the trend compared to an annualized growth rate of 6.9% recorded in the fourth quarter of 2021.
It is also the weakest quarter since the spring of 2020, when the pandemic plunged the US economy into a deep recession.
In the first quarter, the world’s largest economy was affected by the Omicron wave that crossed the country and the persistence of problems in supply chains.
Inflation, already high, was exacerbated by the Russian invasion of Ukraine at the end of February.
A few economists have recently warned of the possibility of a short-term recession, pointing to a combination of factors affecting the economy starting with inflation at a pace not seen since the early 1980s.
Between January and March, consumer prices rose 6.3% year-on-year, according to the PCE inflation index, the one favored by the American central bank (Fed), published with GDP on Thursday.
It takes at least two consecutive quarters of GDP contraction for an economy to be considered in recession. We will therefore have to wait until the second quarter to find out.
In addition to inflation, companies in the United States were confronted in the first quarter, as last year, with a labor shortage which can once more be explained by a series of factors including retirements, resignations by the millions each month while demand has been strong for a year.
– “Robust for the moment” –
Additionally, the Russian-Ukrainian war hit global supply chains while they were still recovering from the pandemic.
The ministry also notes the decrease in government aid as well as the drop in exports (-5.9%), public spending by the federal state (-5.9%) while imports, which weigh in on the calculation of GDP. , increased by 17.7%.
The majority of economists nevertheless believe that the American economy remains solid, noting that consumption, the historical engine of growth in the United States, has held up.
In the first quarter, these expenses indeed increased by 2.7%, following 2.5% in the last quarter of last year.
“Weak on the surface, but robust from within,” tweeted Gregory Daco chief economist EY Parthenon, while taking care to add in parentheses: “for the moment”.
“The first contraction in GDP since the end of the recession is sure to stoke fears of a slowing economy, but on closer inspection, the report is not as worrying as it seems. “, commented for her part Lydia Boussour, economist at Oxford economics.
“The economy has strong underlying strength that has shown resilience in the face of Omicron, continued supply constraints and high inflation,” she said.
It remains to be seen for how long as the war in Ukraine slows growth in a majority of countries around the world and China’s zero-tolerance policy on Covid continues to fuel supply problems.
In this uncertain global context, Joe Biden once once more urged Congress to vote on his investment plans.
With an unexpected drop in GDP and inflation at its highest, eyes are also on the American Central Bank (Fed) which meets on Tuesday and Wednesday.
Its chairman Jerome Powell said last week that the Fed was considering raising key rates faster than expected. A policy that might be questioned.
