In the first quarter of 2022, the US economy shrank for the first time since COVID sent it into a "deep, dark hole" in 2020—but economists believe the fall in GDP is a blip, not a sign the US is entering a recession again. The economy contracted at a 1.4% annual rate, according to Commerce Department figures. Consumer spending, however, rose at a 2.7% annual rate and most economists expect the economy to resume growing at a modest rate in the second quarter of 2022, the Wall Street Journal reports. The economy grew at a 6.9% annual rate in the last quarter of 2021.
Issues affecting economic growth in the first quarter include slower restocking in warehouses and a trade imbalance, with exports falling 6% and imports surging 20%—a sign that the US economy is in more robust shape than overseas ones. Business spending remained strong and the AP notes that the job market is also in good shape, with an unemployment rate of 3.6% and the number of people receiving unemployment benefits at the lowest level since 1970.
"The report isn’t as worrisome as it looks,” Lydia Boussour, at Oxford Economics, tells the AP. "The details point to an economy with solid underlying strength that demonstrated resilience in the face of omicron, lingering supply constraints and high inflation." Axios notes, however, that the GDP figure has a "distinct whiff of stagflation—stagnant growth paired with high inflation" that could be a big problem for Democrats ahead of the midterm elections. (Deutsche Bank has predicted a "major recession" next year.)