Market Updates
U.S. First Quarter GDP Shrank at 1.4% Pace
Brian Turner
28 Apr, 2022
New York City
The U.S. GDP fell unexpectedly at 1.4% pace after adjusting for inflation in the first quarter of 2022.
The unexpected decline was driven by a large trade deficit, surging inflation, and the rise of omicron virus in the beginning of the year.
Moreover, the government assistance payments in the form of forgivable loans to businesses, grants to state and local governments, and social benefits to households all decreased as provisions of several federal programs expired or tapered off.
The decline was also driven by a decrease in government spending and defense expenses, fall in exports and rise in imports and a deceleration in private inventory investments.
The GDP growth suffered from a 0.3 percentage point decline after the defense spending fell 8.5%.
Most of the factors that drove the GDP growth to negative are likely to reverse before the year's end.
Current dollar GDP expanded at 6.5% annual rate to a level of $24.38 trillion.
The price index for gross domestic purchases increased 7.8% in the first quarter, compared with an increase of 7.0% in the fourth quarter.
The PCE price index increased 7.0%, compared with an increase of 6.4%. Excluding food and energy prices, the PCE price index increased 5.2%, compared with an increase of 5.0%.
The real disposable income declined 2% compared with a decrease of 5.6% in the fourth quarter.
The economy expanded at 5.7% in 2021 and in the fourth quarter rose at 6.9% annual pace.
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