gThe DP fell at an annualized rate of 1.5% in the first quarter of 2022, according to a revised estimate from the Bureau of Economic Analysis Thursday morning.
The decline in inflation-adjusted GDP is a major reversal from the previous quarter, when growth soared to a rate of 6.9% as businesses began to recover more quickly from the pandemic as the restrictions were lifted.
CBO FED PROJECTS WILL SUCCEED IN SOFT LANDING AND AVOID RECESSION
The first quarter of this year marks the first such contraction since the second quarter of 2020, when the economy suffered from the huge shock of coronavirus shutdowns.
The decline in GDP in the first part of this year has fueled concern among some economists that a recession is approaching.
“While we still expect the Fed to steer the economy toward a soft landing, downside risks to the economy and the likelihood of a recession are increasing,” Oxford Economics economists said after publication of the report.
The country is plagued by explosive inflation, with consumer prices rising 8.3% in the 12 months to April. As a result, the Federal Reserve embarked on a historic cycle of interest rate hikes designed to slow the economy and rein in rising prices.
The stock market has lost much of its value in recent months, with the S&P 500 down more than 17% year-to-date, edging closer to bearish territory.
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Despite the negative pressures on the economy, the labor market has been hot. The Bureau of Labor Statistics reported this month that the economy beat expectations and added 428,000 jobs in April, a sign of resilience in the labor market.
The jobless rate held steady at 3.6% in April, roughly where it was just before the pandemic hit the economy. Labor force participation fell slightly to 62.2%, its lowest level in three months, with the participation rate of workers in their early working years also falling a bit.