MAY 2, 2022 – US GDP FALLS IN Q1 AFTER RECORD GROWTH IN 2021
Unexpectedly US GDP fell at a 1.4 percent pace in Q1, below analysts’ expectations for a 1 percent gain. This was a sudden change, given the economy has been performing better than it has in almost 40 years. In comparison, GDP grew 6.9 percent in 2021.
The pullback is attributed to deceleration in private inventory investment, decreased government spending and rising imports. Consumer spending, which accounts for almost two-thirds of the economy rose 2.7 percent in the quarter despite inflation.
Economists are not worried about a recession, yet. The surge in imports is due to the restocking of shelves as companies replenish inventories, especially of consumer goods; but it’s expected this will all even out by the third quarter of this year. Hopes are for a soft-landing as the Fed keep rates moving up to curtail inflation. Though, some of the big banks see a significant chance of a recession in late 2023 if the Fed moves too aggressively. The Fed meets this week when they are expected to raise rates by 0.5 percent.