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GDP Decreased by 1.4% in First Quarter, First Contraction Since 2020

GDP Decreased by 1.4% in First Quarter, First Contraction Since 2020

It’s worse than we thought. Literally negative growth.

https://www.youtube.com/watch?v=5Qma8LHQlrA

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!

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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Comments

“Experts predicted …”

That should have been your first clue that something else would happen.

    Mary Chastain in reply to irv. | April 28, 2022 at 9:41 am

    LOLOL, right?! My best friend is a financial guy. I consult with him whenever reports drop. He’s always told me never to listen to these “experts.” CNBC had Anthony Scaramucci on to talk about the economy! Like what?!?!

From AP “Most economists expect a rebound in the April-June quarter as solid hiring and wage gains sustain growth.” LOL. First, if hiring and wage growth is so good, then why do college graduates need a bail out from their student loans? Shouldn’t they already have jobs and rising pay?

    Ironclaw in reply to Guardian79. | April 28, 2022 at 3:39 pm

    Nobody really has rising pay. Inflation has taken care of that unless you make 10% more each year than you did the last.

We don’t have a shortage of potential workers, we have about 2.5 to 3 million less people participating in the workforce than in Jan 2020. That doesn’t include the working age able bodied who were unemployed but not looking for work.

The policies implemented during Covid created this. The stimulus checks, lavish extended unemployment benefits, student loan payment deferments, no evictions among others led to people staying home and refusing to work particularly on the lower end of the wage scale. The Vax mandates led to early retirement or people quitting the labor force to avoid compliance.

All these deliberate policy choices exacerbated existing problems. The d/prog and chamber of commerce will use the decline in labor force participation to scream for relief via importing more low wage immigrants.These folks don’t want to pay market based wages instead they want to change the composition of the labor market. It’s already starting and the r chamber of commerce types will attempt this BS again unless we confront them in primary elections and hound them in the general.

But socialism was supposed to work this time!

We are, economically, at the point where disincentives are expected to maintain growth. Kind of like the old saying “pushing a string”. Can’t do it.

Supply chains are messing up manufacturing but people are not buying cars the dealerships have ready to sell

Dealers are demanding full MSRP and more plus jacked up interest rates. Consumers are predictably saying no. I bought out my lease rather than pay the extortionate prices dealers are demanding.

    Ironclaw in reply to randian. | April 28, 2022 at 6:54 pm

    Supply and demand. The supply is very limited and therefore they’re going to extract all they can from it. Right now, I’d be looking for a beater to fix up before I’d look at buying a new car.

Let the Biden Depression begin

    MattMusson in reply to Wisewerds. | April 28, 2022 at 12:15 pm

    A Recession requires 2 consecutive quarters of negative growth. So, by the time you can declare a Recession you have already spent 6 months in the Suck.

Isn’t spending measured in dollars? Of course, spending went up because inflation is up dumbass!

A few months back one of the Fed economists predicted +0.1% growth in Q1 but everyone ignored it. At the time I commented somewhere that 0.1% is a number you use when you know it’s going negative but you don’t want to admit it. Well here we are with reality.

Keep in mind that we are one quarter away from officially being in a recession. Those Fed predictions of a recession in 2023 might be accelerating. With only two months left in this quarter and no time for any new rate hikes to make an impact, it has to be hard to not predict another negative GDP for Q2. Except that Dems are in control of the numbers and it’s an election year, so anything can happen, right?

Defense contractors to the rescue, sending our stock pile to the Ukraine, New production and replenishing the stock pile as well.
I want to see how the outflow of cash through Western Union and other wire transfer services are doing these days.

Can someone clarify if government spending is part of GDP?

    Ironclaw in reply to r2468. | April 28, 2022 at 6:56 pm

    The four components of gross domestic product are personal consumption, business investment, government spending, and net exports.

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