Q1 shrank 1.5%. One more quarter of negative growth…

[Mick]

…and we are officially in recession.

The US economy shrank at a 1.5% annualized rate in the first three months of the year, according to new data released yesterday. The figure is a write-down from a previous estimate of 1.4% and is the first quarterly decline in the gross domestic product (see 101) since the onset of the pandemic in the first half of 2020.

The drop was caused in part by downward revisions to private inventory investments, as warehouses and stores were slower to stock their goods, and residential investments, which include constructing and remodeling homes. A wider trade deficit was also a factor, as the US spent more on imports than it made from exports. Consumer spending grew at a 3.1% annualized rate, helping to offset the decline.

Analysts expect the US economy to rebound in the second quarter, though there are uncertainties in the outlook, including the effects of the Federal Reserve’s expected interest rate hikes to curb inflation. The nonpartisan Congressional Budget Office estimates the economy will grow 3.1% in 2022.

[Neodymium60]

Thanks Mick. Do you think the uptick we are seeing in markets right now is the real deal or just a dead Brandon bounce?

And you have to wonder about Powell raising rates.  One troubling number is that for every 1% increase in mortgages, you can figure about a 8% drop in property value. (I stand to be corrected on that).   The political class wants high valuations so homeowners can get equity loans and juice the economy.  And of course, get reelected in Nov.    My 2 cents.

• This reply was modified 3 years, 10 months ago by Neodymium60.

[rogpodge]

This was a downward revision of 1Q. We’re not in a recession until 2Q numbers come out in July. To the extent bad news can be piled into the first quarter, and any pent up demand can be released in the second quarter, we may still avoid a recession. I’m not hopeful (inflation covers some reductions in units sold, for example, and the durable goods order numbers were terrible), but it is still possible.

[Author]

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