In the United States, GDP fell by 1.4% in the first quarter

Joe Biden at the White House, April 28, 2022.

For the first time since the Covid-19 crisis, the US economy contracted in the first quarter of 2022. Gross domestic product (GDP) fell by 1.4% year on year compared to the last quarter of 2021. This This bad figure was not expected and marks a serious reversal of the situation compared to the 6.9% growth at the end of 2021.

Exegesis of the figures, however, allows us to hope that the country will not technically go into recession, with a second quarter of decline in activity: despite inflation not seen since 1980, Americans continued to consume (1, 8 point contribution to growth, up 2.7%), mainly in services, and business investing (1.3 point contribution, up 7.3%): the two traditional drivers of growth would thus be solid. “The American economy – powered by working families – continues to hold its own in the face of historic challenges”President Joe Biden immediately commented.

The poor figure published Thursday, April 28 by the statistics office can therefore be explained by three other factors: the destocking of companies (0.8% negative contribution to growth), the reduction in public expenditure (– 0.5%) , while the various stimulus plans have come to an end, and, above all, the soaring US trade deficit (3.2 points of negative contribution). In detail, Americans continued to import massively (up 17.7%), especially foreign automobiles, while domestic production is hampered by the shortage of microprocessors, while companies have resorted to oil foreign. Exports, which fell 5.9%, were hampered by the crisis in Ukraine and the Omicron variant of SARS-CoV-2, which affected external economies more than the United States.

Harvard economics professor and former adviser to Barack Obama Jason Furman tries on Twitter to depoliticize the interpretation of this figure. “None of the weaknesses in this figure have anything to do with changes in monetary policy. [qui affecteraient l’investissement] or back [du stimulus] budgetary [qui affecterait la consommation]. It’s an economy with high demand but the supply can’t keep up.”summarizes Mr. Furman.

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How will the Federal Reserve react?

The challenge is to know how the Federal Reserve will react, when inflation soared to 8.5% in March. After increasing its key rates by a quarter of a point in March – they are now in a range between 0.5% and 0.75% – the institution chaired by Jerome Powell is to meet on May 3 and 4 to decide on a new rate hike, at least by half a point, or even three-quarters of a point. By the end of the year, the Fed could raise its rates to 2.75% according to market expectations.

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