US GDP Declined 0.4 Percent January-March Despite Massive Dollar Inflation

1.4% annualized. Prediction was for 1% expansion. You would think there would be "growth" on inflation alone

Source: CNBC

Gross domestic product unexpectedly declined at a 1.4% annualized pace in the first quarter, marking an abrupt reversal for an economy coming off its best performance since 1984, the Commerce Department reported Thursday.

The negative growth rate missed even the subdued Dow Jones estimate of a 1% gain for the quarter, but the initial estimate for Q1 was the worst since the pandemic-induced recession in 2020. GDP measures the output of goods and services in the U.S. for the three-month period.

A plethora of factors conspired to weigh against growth during the first three months of 2022, which fell off a cliff following the 6.9% gain to close out last year.

Rising Covid omicron infections to start the year hampered activity across the board, while inflation surging at a level not seen since the early 1980s and the Russian invasion of Ukraine also contributed to the economic stasis.

Prices increased sharply during the quarter, with the GDP price index deflator rising 8%, following a 7.1% jump in Q4. [Would be double using 1980 calculation.]

A deceleration in private inventory investment weighed on growth after helping propel GDP in the back half of 2021. Other restraints came from exports and government spending across state, federal and local governments, as well as rising imports. [“Private inventory investment” was the major reason behind the 6.9% annualized growth in Q4 but now that inventories have been rebuilt there is less spending on that creating a GDP decline relative to Q4 (but GDP is still higher than it was in Q3 — of course much of it is inflation and the everything-bubble.]

1 Comment
  1. guest says

    How is the GDP of China doing ?
    How is the GDP of Russia doing ?

    In 2022 —like in the years before— people in the United States will spend $100,000,000,000 on dogs & cats

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