U.S. Economy Contracts Slightly More Than Originally Estimated

The U.S. economy contracted in 2022’s 1st quarter, the first downturn since 2nd quarter 2020 when the economic fallout from the pandemic caused the economy to contract as much as 31.2%. According to the second estimate for real gross domestic product (GDP) recently released by the Bureau of Economic Analysis, real GDP contracted at an annual rate of 1.5% in the first three months of 2022. That estimate is based on more complete source data and was a slight downgrade from the 1.4% contraction announced in the advance estimate issued last month. That recent contraction is in contrast to the 6.9% growth seen in 4th quarter 2021. The recent decline in real GDP reflected decreases in private inventory investment, exports and government spending. On the other hand, consumer spending, nonresidential fixed investment and residential fixed investment increased. The updated change in real GDP reflected downward revisions to private inventory investment and residential investment that were partially offset by an upward revision to consumer spending.