WASHINGTON, July 1, 2022 (Xinhua) The US economy contracted at an annual rate of 1.6 percent in the first quarter of the year in the third and final estimate, the US Commerce Department said Wednesday.
In the advance estimate released in late April, the decline in real GDP was 1.4 percent. In a second estimate last month, that was revised to a 1.5 per cent drop.
The first-quarter GDP data represents the first contraction of the US economy since the onset of COVID-19.
The decrease in real GDP reflects a decrease in exports, federal government spending, private inventory investment, and state and local government spending, while imports have increased, which is a subtraction in the GDP calculation.
Non-residential fixed investment, personal consumption expenditures, and residential fixed investment rose, according to the report.
“In the first quarter, the increase in COVID-19 cases associated with the omicron variable led to continued restrictions and disruptions to enterprise operations in some parts of the country,” the department’s Bureau of Economic Analysis said in the report.
The bureau noted that state aid payments in the form of forgivable loans to businesses, grants to state and local governments, and social benefits to families “all decreased as provisions of many federal programs expired or were curtailed.”
With inflation at its highest level in four decades, more and more economists believe that the US Federal Reserve’s tougher stance might plunge the US economy into recession.
Even Federal Reserve Chairman Jerome Powell recently said that a recession is “certainly a possibility” even though it is “not at all our desired outcome”.
International Monetary Fund Managing Director Kristalina Georgieva said Friday that there is a “narrow path” to avoiding a recession in the United States, highlighting “significant downside risks.”
According to the current GDP model of the Federal Reserve Bank of Atlanta updated Monday, US GDP is estimated to grow at a seasonally adjusted annual rate of 0.3 per cent in the second quarter.
