The United States economy shrank at a 1.5% annual rate during the first quarter of 2022, according to a new report from the Bureau of Economic Analysis.
The poor numbers were the worst since Gross Domestic Product (GDP) fell by 31.2% in the second quarter of 2020 due to lockdowns put in place during the beginning of the COVID-19 pandemic. The 1.5% reduction was also worse than the 1.3% Dow Jones estimate and worse than the originally reported 1.4%.
“Real gross domestic product (GDP) decreased at an annual rate of 1.5 percent in the first quarter of 2022,” the report states. “The GDP estimate released today is based on more complete source data than were available for the ‘advance’ estimate issued last month. In the advance estimate, the decrease in real GDP was 1.4 percent. The update primarily reflects downward revisions to private inventory investment and residential investment that were partly offset by an upward revision to consumer spending.”
According to CNBC, their “Rapid Update survey shows a median expectation of 3.3% growth in the second quarter; the Atlanta Fed’s GDPNow tracker also points to a rebound, but at a more subdued 1.8% pace.”
“This year will be mixed. Declines should not be repeated, but growth will not match what has been seen since the economy began reopening,” said Scott Hoyt, senior director at Moody’s Analytics, according to CNBC. “With the Federal Reserve seemingly totally focused on bringing inflation back down, recession risks are uncomfortably high, although perhaps more for next year than this.”