US economy shrinks, threats loom, but growth likely to last
ABC News
The U.S. economy shrank last quarter for the first time since the pandemic recession struck two years ago, contracting at a 1.4% annual rate, but consumers and businesses kept spending in a sign of economic durability
WASHINGTON -- The U.S. economy shrank in the first three months of the year, and faces threats from high inflation and rising interest rates, yet economists foresee a return to growth for the rest of 2022, based on the strength of the job market and consumer spending.
The 1.4% quarterly decline in gross domestic product — the first contraction since the pandemic hit in 2020 -- is not likely a prelude to recession, economists say. That may bring little comfort to President Joe Biden and Democrats, who face mid-term elections this year in which rising prices for food, energy and other essentials will be a major theme of Republican opposition.
Two trends drove the U.S. economy’s decline last quarter, according to Thursday’s report from the Commerce Department:
— Imports soared nearly 20% as Americans bought more foreign-made goods, while exports fell almost 6% as growth slowed overseas — a widening of the trade deficit that subtracted 3.2 percentage points from GDP.
