U.S. GDP contracted for the first time since the start of the pandemic, shrinking by 1.4%.
GDP measures the output of goods and services in the U.S. for a three-month period.
A March record high for the U.S. trade deficit took about 3.2 percentage points off GDP as exports fell 5.9%, & imports rose 17.7%. Defense spending was also 8.5% lower, adding to the decrease in GDP.
On the other hand, consumer spending, which accounts for about two-thirds of the U.S. economy, rose 2.7% despite decades-high inflation.
Why this matters
While the contraction came as a surprise to analysts, who expected a gain of 1% for the U.S. economy, the report’s effect wasn’t significant. Stocks & bonds were both up yesterday, & the report isn’t likely to affect the Fed’s course for upcoming (aggressive) interest rate hikes.