Q1 GDP Was Even Worse Than Originally Reported. What Comes Next? – By Yuval Rosenberg and Michael Rainey (The Fiscal Times) / May 26, 2022
Good Thursday evening. We’ll be back in your inbox Tuesday. In the meantime, we wish you a happy and meaningful Memorial Day weekend. Here’s what’s happening on the fiscal front.
First-Quarter GDP Was Even Worse Than Originally Reported. What Comes Next?
The U.S. economy was even weaker in the first three months of 2022 than initially thought, the Bureau of Economic Analysis said Thursday, as it updated its estimate of first-quarter GDP growth to –1.5%, a bit worse than the 1.4% decline that was first reported.
Lower numbers for restocking inventories and residential construction accounted for most of the downward revision, though those were partially offset by an upward revision in consumer spending. Overall, the decline in GDP in the first quarter reflects “decreases in private inventory investment, exports, federal government spending, and state and local government spending,” as well as an increase in imports, the agency said.
The pandemic continued to play a powerfully disruptive role, at a time when many federal aid programs had ended. “In the first quarter, an increase in COVID-19 cases related to the Omicron variant resulted in continued restrictions and disruptions in the operations of establishments in some parts of the country,” the report said. “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.”
