It’s worse than we thought. Literally negative growth.
Experts predicted the economy would expand by 1.1% in the first quarter.
Instead, our Gross Domestic Product contracted by 1.4% in the first quarter. It is the first decrease since 2020.
We had no growth in the first quarter. None. Zilch. Literally negative growth.
People are spending money, but the GDP goes deeper than the consumer aspect. Supply chains are still messed up. We have labor shortages. Prices continue to soar.
From the report:
The decrease in real GDP reflected decreases in private inventory investment, exports, federal government spending, and state and local government spending, while imports, which are a subtraction in the calculation of GDP, increased. Personal consumption expenditures (PCE), nonresidential fixed investment, and residential fixed investment increased (table 2).
The decrease in private inventory investment was led by decreases in wholesale trade (mainly motor vehicles) and retail trade (notably, “other” retailers and motor vehicle dealers). Within exports, widespread decreases in nondurable goods were partly offset by an increase in “other” business services (mainly financial services). The decrease in federal government spending primarily reflected a decrease in defense spending on intermediate goods and services. The increase in imports was led by increases in durable goods (notably, nonfood and nonautomotive consumer goods).
A contraction means no growth:
The drop in GDP stemmed from a widening trade deficit, with the U.S. importing far more than it exports. A slower pace of inventory investment by businesses in the first quarter–compared with a rapid buildup of inventories at the end of last year–also pushed growth lower. In addition, fading government stimulus spending related to the pandemic weighed on GDP.
The left will blame Russia, but Russia and Ukraine are not major trade partners with America. Granted, the war has not helped supply chains. But we all know supply chains have been messed up for over a year.
You will likely see the left propping up the consumer spending numbers as a positive for the economy. You know, this is just a bump in the road. *Update: I TOLD YOU!
Bloomberg's Jordan Fabian: "[H]ow concerned are you about a recession, given that the GDP report…shows a contraction of 1.4% in the 1st quarter?
Biden: "Well, I'm not concerned…consumer spending & business investment & residential investment increased at significant rates" pic.twitter.com/F37vpjvutU
— Curtis Houck (@CurtisHouck) April 28, 2022
Personal consumption increased by 2.7% while services spending went up 1.86%. But durable goods spending stagnated.
Durable goods spending is buying merchandise meant to last for the home like couches, tables, wash machines, dishwashers, etc.
Have you been to a car dealership lately? I went to get a checkup on my 4Runner the other day. The guy said they expanded the waiting area because they don’t have cars to display in the showroom. Supply chains are messing up manufacturing but people are not buying cars the dealerships have ready to sell. Business has not been good for a year.
Consumers are spending more on small goods and services. The Wall Street Journal mentioned travel. The big thing I learned from the government keeping me hostage is that I need to see more of America. I saw New Mexico and Arizona in March. I’m are driving to Boston in June for a two-week history-filled trip.
Others have taken advantage but how long will it last? Hotels see an increase in patrons, but owners are still worried:
George Lewis, co-owner of Brass Lantern Inn in Stowe, Vt., is seeing a surge in demand. Visits to his bed-and-breakfast on Maple Street are running strong with rooms selling out some weekends this spring, a sharp shift from earlier in the pandemic when the inn relied on small-business aid to survive.
“People have called up: ‘Are you really sold out?’ ” Mr. Lewis said. “I’m like, ‘Yeah, yeah, we’re really sold out.’ ”
Still, Mr. Lewis is more concerned about business next year. For one, it isn’t clear where inflation will be, he said. Prices have already risen briskly for heating oil to warm rooms, as well as for the cheddar cheese Mr. Lewis uses in egg strata, a breakfast casserole he serves up on Saturdays.
Consumer spending is another wild card, he added.
“We don’t know what people’s pocketbooks can accommodate after this year,” he said. “Some people are spending…independent of what the cost is.”
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