The U.S. economy took a dramatic hit in the first quarter of 2022, with Gross Domestic Product (GDP) shrinking at a 1.4% pace, lower than experts had anticipated.
The contraction marks the worst performance since the spring of 2020, at the height of the pandemic-related recession when businesses were shuttered and customers were forced to stay home.
It also comes as economists had predicted a 1.1% gain which CNBC describes as already having been “subdued.”
They note that the growth rate “fell off a cliff following the 6.9% gain to close out last year” and the -1.4% GDP is a “nasty” turn of events.
That is a huge swing.
“Today’s shock drop in GDP is a wake-up call that the economy isn’t as strong as we all thought,” Chris Zaccarelli explained to Fox News.
Zaccarelli is the chief investment officer for Independent Advisor Alliance.
Today’s economic news calls into question just how accurate President Biden is when he has repeatedly touted his economic recovery efforts by saying, “The Biden plan is working.”
It clearly isn’t working.
It may also be an ominous sign of things to come.
“It reminds us of the reality that growth has been great, but things are changing and they won’t be that great going forward,” economist Simona Mocuta tells CNBC.
That should have been the Democrat campaign motto in 2020: Biden-Harris – Things Won’t Be That Great Going Forward.
The Biden administration itself has indicated there are signs of a potential recession.
United States Labor Secretary Marty Walsh told CNN’s Poppy Harlow that a recession is “a real likelihood” though he added signs were still pointing to a strong economy.
Aside from the usual use of the term “unexpectedly” to describe bad economic news, the media is in overdrive in pointing out positive signs in this report.
The Associated Press writes, for instance, that “the U.S. economy shrank last quarter for the first time since the pandemic recession struck two years ago, contracting at a 1.4% annual rate, but consumers and businesses kept spending in a sign of underlying resilience.”
It’s also directly at-odds with a study by Morning Consult, which found the opposite: that Americans are significantly cutting back their spending due to runaway inflation.
Zeke Miller, White House reporter for the Associated Press, adds the economy shrank “despite solid spending by consumers and businesses.”
As CNBC points out, however, “Consumer expenditures rose 2.7%, but that came amid a 7.8% increase in prices.”
Consumers are spending more and getting less. Consumers are forced to spend more due to inflation and gas prices, even as their paychecks struggle and fail to keep up.
The White House has blamed most significant economic troubles on the Russian invasion of Ukraine.
White House Press Secretary Jen Psaki earlier this month blamed “extraordinarily elevated” inflation numbers on the “Putin price hike,” a phrase they feel has been successfully polled as being just deceptive enough to convince the average American that Biden is not responsible.
Russia invaded Ukraine on February 24th. The economy shrank by 1.4 percent in the first quarter of 2022. The Ukraine invasion had taken place for just 35 days of the 91 making up the first quarter – less than 39% of the time.
A recent poll from The Associated Press-NORC Center for Public Affairs Research indicates 66% of Americans disapprove of President Biden’s handling of the economy.
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