US GDP fell 1.4% as the economy shrank for the first time since the pandemic erupted

The U.S. economy shrank in the first quarter, and supply disruptions affected output and eased core strength in consumer and business spending, suggesting growth will resume soon.

US GDP falls by 1.4% annual rate The Commerce Department reported on Thursday that the fourth quarter saw a sharp change from the annual growth rate of 6.9%. The Govt-19 pandemic and related shocks weakened the US economy in the first quarter of spring 2020. Despite a deep and close recession.

Formed decline in trade deficit widening. Imports to the United States increased and exports decreased, reflecting the dynamic supply chain disruptions associated with the pandemic. The slow pace of investment in corporate inventory in the first quarter – compared to the rapid accumulation of inventory at the end of last year – led to further growth. Moreover, the reduction of government incentive expenditures for epidemics has significantly affected GDP.

Consumer spending, the main driver of the economy, grew at an annual rate of 2.7% in the first quarter, a slight acceleration from the end of last year. Companies invested more money in equipment and research and development, resulting in a 9.2% increase in business expenses.

“The most important aspects of the local economy have been better than they were at the end of 2021 and growth has continued to grow,” said Diane Song, chief economist at Grant Thornton.

Two years after the outbreak of the epidemic, the US economy continues to face challenges, including supply disruptions associated with the epidemic. The war in Ukraine, labor shortages and high inflation. Central bank officials raised the key interest rate by a quarter of a percentage point in March from almost zero to control inflation, and they are more signs of continued growth.

Many economists believe the economy will be able to withstand higher interest rates and return to moderate growth in the second quarter and beyond as consumers and businesses continue to spend.

Between a drop in Govt-19 cases and the removal of the rest of the epidemic controls, Americans are spending more on utilities. A prime travel example: According to global hospitality data and analytics firm STR, hotel occupancy rates in the United States for the week ending April 23 were 65.8%, up from 49.6% at the end of January.

More and more people are boarding the plane after air travel slowed amid the omigron wave. According to the Traffic Safety Administration, about 2.1 million people passed through airport checkpoints in late April, up from 1.4 million three months ago.

George Lewis, co-owner of the Brass Lantern Inn in Stowe, sees demand increase. His bed and breakfast visits to Maple Street have had rooms for sale a few weekends this spring, a sharp change since the pandemic began, as the hostel has relied on helping small businesses survive.

“People shouted, ‘Did you really sell?'” Lewis, I said, ‘Yes, yes, we’re really sold. ”

However, Mr. Lewis is more interested in business next year. For example, it is not clear where inflation will be, he said. The prices of heating oil for the already warm rooms have increased, as well as Mr. The rice cheese that Louis uses in the yellow yolk is his Shabbat breakfast.

He added that consumer spending is another essential card.

“We do not know what will go into people’s pockets after this year,” he said. “Some people are spending … it doesn’t matter how much it costs.”

GDP growth, percentage points contributions for selected categories

cost

in services

It was wonderful

contributor.

the cost of goods

(Percent. Points.)

Accumulation

Exams

Directed GDP

Too late

last year …

… but not far

this year

recession

Weight

growing.

trade

There was a shortage

pull one more

growing.

cost

in services

It was wonderful

contributor.

the cost of goods

(Percent. Points.)

Accumulation

Exams

Directed GDP

Too late

last year …

… but not far

this year

recession

Weight

growing.

trade

There was a shortage

pull one more

growing.

cost

in services

It was wonderful

contributor.

the cost of goods

(Percent. Points.)

Accumulation

Exams

Directed GDP

Too late

last year …

… but not far

this year

recession

Weight

growing.

trade

There was a shortage

pull one more

growing.

Ingredients

cost

(Percent. Points.)

Accumulation

Exams

Directed GDP

Too late

last year …

… but not far

this year

recession

Weight

growing.

trade

shortage

even had

clouds

Development.

Ingredients

cost

(Percent. Points.)

Looking ahead, according to a Wall Street Journal survey, GDP is expected to grow by 2.6% in the fourth quarter of 2022, which is in line with 2019 growth but much lower than last year’s 5.5% growth .

The labor market is now the main source of economic power. Unemployment claims – the approximation for layoffs – are approaching a historic decline and last week fell to 180,000 amid a shortage of available manpower, employers were catching up with workers. Businesses support consumer spending and employment wages.

Percentage contribution to GDP conversion for selected groups, Q1 2022

Housing investments 0.1

Special inventory -0.84

Houses and utilities 0.33

Other unbearable 0.11

Food and Beverage -0.07.2019

Depreciation costs -0.09

Housing investments 0.1

Special inventory -0.84

Houses and utilities 0.33

Other unbearable 0.11

Food and Beverage -0.07.2019

Depreciation costs -0.09

Housing investments 0.1

Special inventory -0.84

Houses and utilities 0.33

Other unbearable 0.11

Food and Beverage -0.07.2019

Depreciation costs -0.09

Housing investments 0.1

Special inventory -0.84

Houses and utilities 0.33

Other unbearable 0.11

Food and Beverage -0.07.2019

Depreciation costs -0.09

Housing investments 0.1

Special inventory -0.84

Houses and utilities 0.33

Other unbearable 0.11

Food and Beverage -0.07.2019

Depreciation costs -0.09

However, high inflation reduces household purchasing power. Consumer prices rose 8.5% in March, the highest level in four decades. High inflation wipes out wage gains for many workers: average hourly earnings increased by 5.6% over the same period.

High prices are also a challenge for many companies.

Share your thoughts

What is your vision for the US economy in 2022? Join the conversation below.

Cratex Manufacturing Co. Ltd., a 100-person manufacturing company, manufactures and sells industrial lubricants to other manufacturers for use in the production of steel mills, jet engine blades and metal castings. The San Diego-based company said prices for products such as resins and tires have risen 5% to 30% since last fall, said Riker McCasland, chairman of Cratex.

At the same time, Cratex had to raise wages to keep workers.

“It’s a bet to be ahead of all the rising costs,” he said. tha McCasland. He added that increases in commodity prices are surpassing Cratex’s ability to offset them through its price increases.

Airlines, gas stations and retailers use sophisticated ways to adjust their prices according to price, demand and competition. WSJ Charity Scott explains what dynamic pricing is and why companies use it so often. Description: Adele Morgan

write to Sarah Shani Cambone at [email protected]

Copyright © 2022 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8

Leave a Comment