The economy had its worst annualized performance since the pandemic-induced recession in 2020, according to the government, which blamed an unanticipated drop in economic activity on the omicron variety of Covid-19 and reduced government support in an updated announcement Thursday. The economy had its worst annualized performance since the pandemic-induced recession in 2020, according to the government, which blamed an unanticipated drop in economic activity on the omicron variety of Covid-19 and reduced government support in an updated announcement Thursday.
According to the Bureau of Economic Analysis, the US economy contracted at an annual pace of 1.5 percent in the first quarter of 2022, the first decrease since the second quarter of 2020. This is a worse-than-expected update to last month’s data, which indicated a 1.4 percent decline.
The government said the update was mostly due to lower-than-expected spending on company inventory and residential developments, which was only slightly offset by an increase in consumer spending. According to the release, a record wave of Covid-19 cases triggered by the omicron variant resulted in continued restrictions and business disruptions in the first quarter, while government assistance programs such as forgivable loans to businesses and social benefits to households expired or tapered off, further impeding growth.
The total fall was fueled by broad declines in exports, government spending, and company inventories, as well as increasing imports, according to the government.
Consumer spending increased 3.1 percent year over year in the first three months of 2018, the strongest rate since the second quarter of 2021, according to the government, while business investments increased 6.8 percent.
The overall decline contrasts with the economy’s better-than-expected growth of 6.9% in the fourth quarter, the best in over 40 years, thanks in part to rising exports and inventory expenditures by car dealers.
