Home Business The US economy is contracting for the first time since the 2020...

The US economy is contracting for the first time since the 2020 Crown crisis


U.S. gross domestic product declined 1.4% in the first quarter of 2022, annually, due to the impact of high war-exacerbated inflation in Ukraine and the problems of continuous supply chains, and this is the first contraction of the US economy since 2020, when the Corona pandemic hit the economies of the world.

The result was far worse than the slight improvement analysts expected and came after the economy grew 6.9% in the fourth quarter of 2021.

One group of analysts was counting on growth of 1.1%.

“The decline in GDP reflects a decline in private investment, exports ( .) and public spending by federal and local governments, while imports, which are deducted from GDP, have increased,” he said. in a note from the United States Department of Commerce.

The United States is suffering from inflation record as they are recovering from the Covid-19 pandemic, parallel to the increase in the prices of oil and other materials prime due to the Russian invasion of Ukraine and problems with global supply chains, which have raised fears of a recession in the world’s largest economy.

But Ian Shepherdson of Pantheon Macroeconomics said the decline in the first quarter is in partly due to companies importing larger quantities to restructure their shares, noting that growth will see a recovery in the second quarter of 2022.

The analyst wrote: “The economy is not about to sink into recession. But there is an increase in imports, in particularly of consumer goods, because wholesalers and retailers are trying to rebuild their stocks “.

This decline comes when Deutsche Bank expects the US economy to plummet in a severe economic downturn before the end of 2023 if interest rates are raised between 5% and 6%.

The bank’s economists, led by David Volkerts Landau, wrote in a note that they believed the Fed would have to raise interest rates much higher than analysts currently expect to successfully curb inflation.

“We will see a severe recession, but our strong view is that the faster the Fed will act in aggressively, the less long-term damage to the economy will be, “they said.

Read More About: Business News


Exit mobile version