United States: GDP contracted 1.4% in the first quarter on an annual basis

This decline in GDP came after continued growth recorded in the last quarter of 2021 (+6.9%), the Commerce Department recalls. The slowdown is expected, but the recession has surprised analysts, who expect growth of 1.1%.

Short-term recession?

However, some economists have warned recently about the possibility of a short-term recession, pointing to a combination of factors affecting the economy, starting with record inflation, which has reached its highest rate since early 1980s. and accentuated by Russian. invasion of Ukraine.

It takes at least two consecutive quarters of GDP contraction to consider an economy in recession.

In addition to inflation, businesses in the United States have faced a labor shortage since last year.

In addition, the Russian-Ukrainian war hit global supply chains as they were still recovering from the pandemic.

In this first estimate, the ministry also points out that the decline in GDP occurred amid a wave of Omicron variant contamination and declining government assistance.

It also noticed a decline in exports (-5.9%), federal public spending (-5.9%) while imports, which weigh in on the GDP calculation, rose 17.7%.

Most economists believe that the U.S. economy remains stable, while consumption, the historical engine of growth, holds.

And in the first quarter, these costs rose 2.7% after 2.5% in the last quarter of last year.

We need to go back to the spring of 2020 to see the GDP shrink. The latter fell 31.2% in the second quarter, when the COVID-19 pandemic paralyzed activity, plunging the world’s largest economy into a deep recession.

The United States favors growth at an annual rate, i.e., projected throughout the year at this rate. Other advanced economies, such as France, were only compared to the previous quarter.

The ministry points out that data collection in the first quarter is incomplete and it will publish two more estimates.