First-Quarter GDP Slid a Bit More Than First Reported

What Thursday’s Economic Reports Tell Us

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The economy shrank a little more than originally reported last quarter, and a weekly measure of layoffs stayed low, reports showed Thursday. 

Here’s a quick look at the most significant economic indicators of the day and what they tell us.

Gross Domestic Product 

  • The U.S. economy shrank a little more last quarter than the government first reported: declining 1.5% instead of 1.4%, according to revised gross domestic product (GDP) figures from the Bureau of Economic Analysis. 
  • The first quarter marked the first time GDP, which measures the country’s total output, was in the red since the COVID-19 outbreak first crushed the economy in the first half of 2020. Despite an increase in consumer spending, the country imported much more than it exported, and businesses invested less in inventory than they did during an unusually active fourth quarter. 
  • The contraction was bigger than originally reported because inventory investments were even smaller and there was less investment in homebuilding, the BEA said. Consumer spending turned out to be a bit better, but it wasn’t enough to offset those declines.
  • Economists reiterated Thursday that they are encouraged by the underlying strength of the economy, and despite the January surge in COVID-19 cases and the inflation rate reaching 8.5%, its highest since 1981, the first-quarter figures show the consumer has been particularly resilient and an economic recession isn’t imminent, if coming at all. 

Initial Jobless Claims 

  • The number of people initiating claims for unemployment benefits fell to 210,000 last week, 8,000 fewer than in the previous week, according to the Department of Labor. This weekly proxy for layoffs continues to stay very low, well within the range that was typical before the pandemic caused millions of job losses.
  • The economy is still tilted in favor of workers over employers, as many businesses continue to have openings they can’t fill. In the short-term, economists expect layoffs to remain isolated to industries like technology, which staffed up aggressively during the height of the pandemic. 

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  1. Bureau of Economic Analysis. “Gross Domestic Product (Second Estimate) and Corporate Profits (Preliminary), First Quarter 2022.”

  2. Department of Labor. “News Release.”

  3. FRED Economic Data. “Initial Claims.”

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