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U.S. 1Q GDP Revised Down Slightly but Initial Jobless Claims Fell Last Week

Published 05/26/2022, 08:21 AM
Updated 05/26/2022, 08:39 AM
© Reuters.

© Reuters.

By Geoffrey Smith 

Investing.com -- The U.S. economy shrunk by slightly more than initially estimated in the first quarter of the year, according to fresh data released on Thursday. 

Gross domestic product contracted at an annualized pace of 1.5%, rather than the 1.4% preliminary reading, the Bureau of Economic Analysis said. 

The gloomy revision was offset slightly by a small positive surprise on more timely data on jobless claims. The number of people making initial claims for jobless benefits fell to 210,000 from 218,000 the previous week. Analysts had expected 215,000. The number of those making continuing claims rose by just over 30,000 however to 1.346 million.

The jobless claims numbers show little sign of the current labor market tightness unwinding in the near future, despite a slew of corporate updates suggesting that more and more companies are looking to restore profit margins by cutting costs - including labor costs.

The fall in GDP was largely the result of net trade, reflected in record imports during the quarter, and by inventory de-stocking, with the vehicle segment particularly badly affected by renewed supply chain problems.

However, final sales to domestic purchasers, which excludes such factors, still grew at an annualized rate of 2.7%, suggesting that the consumer demand was still robust.

The BEA also gave a reminder of the increasing price pressures felt across the country. Energy prices increased 42.5%, while food prices increased 11.2%. Excluding food and energy, prices increased 6.7% percent in the first quarter, accelerating from a rise of 6.2% in the final quarter of 2021.

Oxford Economics' Lead U.S. economist Lydia Bussour said the figures kept the Federal Reserve on track for a half-point raise in the Fed Funds target range at both of its next two meetings. 

"While we still expect the Fed to steer the economy toward a soft landing, downside risks to the economy and the probability of a recession are increasing," Bussour said in a note to clients. "A more aggressive pace of Fed rate hikes, a tightening in financial conditions, the ongoing war in Ukraine, and China's zero-COVID strategy increase the risk of a hard landing in 2023."

 

Latest comments

FED policy STAGFLATION
imagine if trump was president how different these articles would be worded
yeah, much worse
after 10 pm Dow and Nasdaq will the GDP figures. Even if it is for first qtr...these figures shows what will be outcome in 2nd qtr when actually ukrain war and inflation side-effects started showing presence
will see
People think it's going to go up from here.Just think where will markets be if the GDP data next quarter is -ve which will be. This will be going below pre COVID. Pre COVID is not the resistance.This is another crisis after COVID.
Inflation + Gdp data makes future investors tensioned
I think U. S FUTURE MUST GO DOWN
it is just revision, no significant surprise
Us stock Bump? HAHA THAT’S JOKE❗️
1Q is history
and futures is still up. this is simply amazing!
Yes market has factored all this or it's a trap
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