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

Economic Indicators May 26, 2022 08:39AM ET
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© 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."

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

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