The U.S. economy shrank at a 1.4 percent annualized rate in the first three months of 2022 after more than a year of robust growth, sparking concern about a possible recession.
According to a Commerce Department report today, the slowdown is the result of a slower restocking of retail goods and a sharp drop in exports. Economists said many businesses bought less inventory in the first quarter because they had stocked up on extra merchandise late last year to guard against supply chain shortages and delays. The report was surprising considering the U.S. economy grew by 5.7 percent last year, the fastest pace since 1984.
At the White House, President Biden downplayed the report, noting that the job market and consumer spending continue to be strong.
“The American economy – powered by working families – continues to be resilient in the face of historic challenges,” Biden said. “Last quarter, consumer spending, business investment, and residential investment increased at strong rates. The number of Americans on unemployment insurance remains at the lowest level since 1970.”
Congressional Republicans jumped on the Commerce Department numbers as further evidence that Biden and Democrats are not taking the right steps to facilitate economic recovery.
“Runaway inflation is crushing working American families on Democrats’ watch,” said Senate Minority Leader Mitch McConnell (R-KY) earlier today. “The share of Americans who say the economy is our most important problem hasn’t been this high since the last time Democrats controlled the White House…No longer are Democrats just presiding over a disappointing recovery, now they’ve thrown the recovery into reverse and they’re going backwards.”