GDP fell at a 1.5% annualized rate in the first quarter of 2022, a revised estimate from the Bureau of Economic Analysis showed Thursday morning.
The decline in inflation-adjusted GDP is a major reversal from the previous quarter, when growth soared to a 6.9% rate as businesses began healing faster from the pandemic as restrictions were lifted.
CBO PROJECTS FED WILL PULL OFF SOFT LANDING AND AVOID RECESSION
The first quarter of this year marks the first such contraction since the second quarter of 2020, when the economy suffered from the enormous shock of coronavirus shutdowns.
The decline in GDP for the first part of this year fueled anxiety among some economists that a recession is around the corner.
"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," economists from Oxford Economics said after the report was released.
The country is being plagued by explosive inflation, with consumer prices increasing by 8.3% in the 12 months ending in April. As a result, the Federal Reserve has embarked upon a historic interest rate hiking cycle designed to slow the economy and tame the rising prices.
The stock market has shed a lot of its value over the past few months, with the S&P 500 off by more than 17% since the start of the year, nearing bear market territory.
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Despite the negative pressures on the economy, the labor market has been hot. The Bureau of Labor Statistics announced this month that the economy exceeded expectations and notched 428,000 more jobs in April, a sign of resiliency in the labor market.
The unemployment rate was steady at 3.6% in April, around the level it was at right before the pandemic hit the economy. Labor force participation fell slightly to 62.2%, the lowest it has been in three months, with the participation rate for workers in their prime working years also declining a bit.