US gross domestic product (GDP) contracted slightly more than previously reported in the first quarter of the year, falling 1.6 percent year-on-year, partly due to a revision in personal consumption spending.
The contraction in the third estimate released by the Commerce Department was up 0.1 points from the second estimate (1.5 percent) released at the end of May, which in turn was 0.1 points higher than the first estimate ( 1.4 percent) published at the end of April. .
Gross domestic product (GDP) fell amid high inflation exacerbated by the crisis in Ukraine, continued disruptions to supply chains, dwindling government aid, and rising cases of the Omicron mutant coronavirus.
But this is not considered a recession, as it requires the contraction of GDP to continue for two quarters in a row.
Spending on financial and medical services, as well as on leisure goods and cars, was lower than expected.
But this was partly offset by stronger-than-expected increases in equity investment, non-residential fixed investment and exports.
The United States prefers to calculate GDP growth on an annualized basis, i.e. compared to the previous quarter, and take the results of the fourth quarter for the entire year. This gives an indication of annual growth if the pace recorded over the past three months is maintained.
But other advanced economies, such as France, use the comparison on a quarterly basis rather than calculating it on an annual basis, and according to that calculation, US GDP contracted by 0.4 percent in the first quarter.
“Household spending will lead to higher growth in the second quarter,” said Rubella Farooqi, chief economist at High Frequency Economics.
“But the outlook after that is uncertain,” Farooqi added, expecting the economy to continue growing this year, “but the pace will slow significantly and recession risks will increase.”