U.S. gross domestic product unexpectedly declined in the first three months of 2022, according to the U.S. Department of Commerce.
GDP fell at an annual rate of 1.4 percent in the first quarter from the previous quarter, the department said in a statement yesterday. The consensus forecast had been for an increase of 1 percent.
A decrease in government spending more than offset continued growth in the private sector, according to the federal analysts. The pandemic was cited as a factor in slowing some activity.
“In the first quarter, an increase in Covid-19 cases related to the Omicron variant resulted in continued restrictions and disruptions in the operations of establishments in some parts of the country,” the Bureau of Economic Analysis wrote in the statement. “Government assistance payments in the form of forgivable loans to businesses, grants to state and local governments, and social benefits to households all decreased, as provisions of several federal programs expired or tapered off.”
Trends involving the various components of the GDP calculation may suggest that the boating industry might face more challenges from upstream factors than from the downstream consumer-demand measures. While private inventory investment decreased, personal consumption expenditures increased with the surge in employment, according to the report.
The overall decline of 1.4 percent “obscures the resilience of the domestic economy,” Diane Swonk, chief economist at Grant Thornton, tweeted yesterday after the data release.
“Consumer spending, housing and business investment added 3.2 percent to growth during the quarter, more than in the fourth quarter. You read that right — the economy accelerated in 1Q,” she wrote. “So why the weakness? Inventories were accumulated at a slower pace in the 4Q, despite ongoing shortages, [and] government spending contracted faster than it did in 4Q.”
GDP increased 6.9 percent in the fourth quarter of 2021, the commerce department said.