After historic growth at the end of 2021, the nation’s economy plunged during the first quarter of 2022, according to a report released Thursday (April 28).
Data from the Bureau of Economic Analysis showed a 1.4% drop in America’s gross domestic product, the biggest measure of economic activity. This is a major shift from last year’s final quarter, which saw a 6.9% increase, CNN reports.
The newly released negative growth rate stuns economists who predicted an increased market growth rate of 1.1% for January to March 2022.
A decrease in inventory investment, government spending, and exports contributed to the economy’s sharp decline. Consumer spending increased by 2.7%, but prices rose 7.8%, CNBC reports.
The wave of omicron at the beginning of the year slowed down economic activity. The nation also faced skyrocketing inflation levels and the effects of Russia invading Ukraine, all of which contributed to the economy shrinking.
Chief economist Ian Shepherdson said in a statement, “This is noise; not signal. The economy is not falling into recession.” Shepherdson continued, "Net trade has been hammered by a surge in imports, especially of consumer goods, as wholesalers and retailers have sought to rebuild inventory."
"This cannot persist much longer, and imports in due course will drop outright, and net trade will boost GDP growth in Q2 and/or Q3,” Shepherdson added.
While many economists still expect the U.S. to avoid recession, the risks are still prevalent, CNBC reports.
To see growth in 2020, reports say there needs to be some resolution in Ukraine and an easing in clogged supply chains.