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Rcd72
May 26, 2022 9:19AM ET
FED policy STAGFLATION
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U.S. 1Q GDP Revised Down Slightly but Initial Jobless Claims Fell Last Week
© 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."
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Comments (9)
Jim Morrison
May 26, 2022 9:15AM ET
imagine if trump was president how different these articles would be worded
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Jurgen Daub
May 26, 2022 9:15AM ET
yeah, much worse
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AnilGajre
May 26, 2022 9:07AM ET
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
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AnilGajre
May 26, 2022 9:07AM ET
will see
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abhishek niranjan
May 26, 2022 9:05AM ET
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.
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Chalakudikkaran changaathi
May 26, 2022 8:58AM ET
Inflation + Gdp data makes future investors tensioned
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Kush Singhal
May 26, 2022 8:53AM ET
I think U. S FUTURE MUST GO DOWN
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Nurlan Rakhimbayev
May 26, 2022 8:48AM ET
it is just revision, no significant surprise
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Nonthiphat Sukwasana
May 26, 2022 8:44AM ET
Us stock Bump? HAHA THAT’S JOKE❗️
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Tomas Habala
May 26, 2022 8:44AM ET
1Q is history
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Edward Chong
May 26, 2022 8:42AM ET
and futures is still up. this is simply amazing!
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Gururaj Rao
May 26, 2022 8:42AM ET
Yes market has factored all this or it's a trap
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