The Washington Post and The New York Times both reported on April 28 about the Bureau of Economic Analysis report issued that day that the U.S.'s gross domestic product (GDP) decreased by 1.4% annually during the first three months of this year. The bureau's report blamed the decrease in real GDP on corresponding decreases in exports, private inventory investment and federal government spending.
Reports about the shrinking economy had been unexpected "after more than a year of rapid growth," the Post's news story said, adding that "new data is fueling concerns about a recession in the future amid steady inflationary pressures and uncertainty over the war in Ukraine."
"The slowdown - the first since the COVID-19 recession in April 2020 - marks a reversal from the torrid pace that followed intense fiscal and monetary stimulus in the wake of the pandemic," the Post continued in its news story. "Last year, for example, the U.S. economy grew by 5.7 percent, the fastest full-year clip since 1984."
The 1.4% drop during the first quarter was a sharp change from the 6.9% increase in real GDP during the fourth quarter of last year, according to the bureau's report.
Not all the news was bad. In its coverage, the Times reported that "the negative number" veiled what in fact is an economic recovery "that economists said remained fundamentally strong" through the first quarter.
"Most important, consumer spending, the engine of the U.S. economy grew 0.7% in the first quarter, despite soaring gas prices and the Omicron wave of the coronavirus, which restrained spending on restaurants, travel and similar services in January," the Times continued.
Wells Fargo Chief Economist Jay Bryson referred to consumer spending in the Times news story as "the aircraft carrier in the middle of the ocean - it just keeps plowing ahead."
The Times also cited a Gallup survey issued the same day that reported the percentage of Americans listing inflation as the most significant household financial problem was at an all-time high.
"Consumer prices rose at a 7% annual rate in the first quarter and Americans' after-tax incomes, adjusted for inflation, fell for the fourth quarter in a row," the Times said.
It isn't all about consumer spending and how much less their money can buy these days, according to the Post's news story. Many businesses purchased less inventory during the first quarter, compared to the same time period last year, because they were dealing with leftover merchandise from 2021.
The post also warned that "prices could trend even higher in coming months," which would threaten the world's economic recovery, which is still reeling from continued supply chain "shocks" from lockdowns in China and the ongoing war in Ukraine.
"We've got a resilient economy, but signs of weakness are starting to show," Grant Thornton Chief Economist Diane Swonk said in the Post's news story. "The reality is that rate hikes and higher prices have consequences."
