GDP contraction in the 1st quarter stronger than expected

At an annualized rate, GDP fell by 1.5% over the first three months of the year.

Inflation at its peak (8.5% over one year in April) has disrupted growth in the United States. At an annualized rate, GDP fell in the first quarter by 1.5% (against a consensus of -1.3%) according to the second estimate published Thursday by the Commerce Department.

In the 4th quarter of 2021, GDP growth had risen to +6.9%.

The first estimate, published at the end of April, had pointed to a contraction of 1.4% for the period January-March, an unexpected halt, in the context of high inflation exacerbated by the war in Ukraine and persistent problems. on supply chains.

This halt was unexpected, in a context of high inflation exacerbated by the war in Ukraine and persistent problems in supply chains.

However, this is not a recession, since it takes at least two consecutive quarters of GDP contraction for this to be the case.

Recession risks increase

This downward revision is linked to certain investments which were lower than calculated during the first estimate, and were only partially offset by consumer spending, which was higher than initially announced, details the department. Trade.

The annualized rate, the measure favored by the United States, compares GDP to the previous quarter and then projects the evolution over the whole year at this rate.

Other countries, such as France, simply prefer to compare to the previous quarter. According to this calculation, the contraction is 0.4% in the first quarter. By way of comparison, the euro zone recorded weak growth of 0.3%.

Compared to the first quarter of 2021, however, US GDP is up 3.5%. China, which uses this method of calculation, recorded year-on-year growth of 4.8% in the first quarter.

“The risks for the economy and the probability of a recession are increasing”, commented Lydia Boussour, economist for Oxford Economics, describing however a “solid economy (…) which has shown resilience in the face of Omicron, the persistent supply constraints and high inflation”.

A third and final estimate will be released on June 29.

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