The U.S. economy contracted last quarter for the first time since the onset of the COVID-19 pandemic two years ago, a sharp reversal from the 6.9% gross domestic product growth in the last quarter of 2021.
The GDP was predicted to expand by 1.1%, and the 1.4% drop on an annualized basis sent shock waves through the administration. Thursday’s report by the Commerce Department is the first of three, and there are two revisions of the data forthcoming. So while the possibility exists that the figure could be revised higher, the news is decidedly grim.
Economists point to multiple factors contributing to the surprising first quarter downturn. They include inflation soaring at its hottest rate since 1981, the Russian invasion of Ukraine, continued supply chain constrictions, and anticipation of interest rate hikes.
While consumer spending and business investment numbers remain strong for the first quarter, there remain very few ways to sugarcoat the figures. There are less than 200 days left until the November midterms, and gas stations from coast to coast feature bright signs to remind voters every day that inflation is higher than it’s been in 40 years.
And now there are ominously increasing predictions of a recession in the near to medium term. Wall Street giant Deutsche Bank just this week predicted a “major recession” is on the horizon, the first major financial institution to do so. Goldman Sachs, though not as pessimistic, still sees the Federal Reserve’s attempt to pull inflation down without spurring a economic downturn as “very challenging.”
This stunning setback comes at the White House and its partners in the legacy media continue to preach that Americans just don’t understand how good the economy is. Seriously.
Biden recently touted 6.6 million jobs created in his first year of office as a “historical” accomplishment. Unfortunately for the White House and media, Americans are smart enough to realize that jobs erased by federal lockdowns in 2020 during the pandemic have not suddenly been “created.” They were finally able to reopen after being forced to close, which hardly qualifies as new positions bursting from the president’s economic program.