Gross domestic product fell at a 1.4 per cent annualised rate in the first quarter following a 6.9 per cent pace at the end of last year.
| The US economy shrank in the first quarter, the first time retreat since 2020 due to a surging local currency that drove a trade imbalance.
“I’m not concerned about a recession,” Mr Biden said. “Consumer spending and business investment and residential investment increased at significant rates, both for leisure as well as hard products.”The Commerce Department’s data showed personal consumption, the biggest part of the economy, rose 0.68 per cent in the first quarter, up from 0.62 per cent in the previous quarter.
Residential investment rose 0.5 per cent, as builders began making some headway on backlogged projects.“While we don’t think this portends recession, the report does contain some important messages for investors and for the Federal Reserve. The weakness in this morning’s report will highlight the risk in raising rates too aggressively for the rest of the year.”
“It does not change our expectations that the Fed will likely hike 50 basis points [half a percentage point] in May and possibly June and then begin a 25 basis point cadence,” Mr Roach said.“With strong growth of consumer spending, business investment and employment in the first quarter, the US economy was not in a recession at the beginning of the year,” Mr Adams said. “Growth should resume in the second quarter as the trade deficit and inventories become smaller headwinds.
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