First-quarter GDP fell 1.5%, worse than expected. Unemployment claims edge lower

A “We’re hiring!” The sign is located at Starbucks in Los Angeles, California.

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The US Commerce Department said Thursday that the US economic contraction that started the year was worse than expected as weak business and private investment failed to offset strong consumer spending.

First-quarter gross domestic product declined at an annualized pace of 1.5%, according to second estimate From the Bureau of Economic Analysis. That was worse than the Dow Jones estimate of 1.3% and a write-off from Initially reported 1.4%.

Downward revisions to both private inventory and residential investment offset the upward change in consumer spending. A ballooning trade deficit has also been subtracted from GDP.

The decline in GDP marks the worst quarter since the pandemic-ridden second quarter of 2020, in which the United States plunged into a recession driven by a government-imposed economic shutdown to fight Covid-19. Gross domestic product fell 31.2% that quarter.

Economists largely expect the US to rebound in the second quarter as some of the factors holding back growth abate early in the year. The sudden rise in the omicron variable slowed the activity, and Russian attack on Ukraine The supply chain problems that have contributed to the high rate of inflation in 40 years have worsened.

CNBC Quick update The survey shows an average growth forecast of 3.3% in the second quarter; Federal Reserve Board of Atlanta GDP now The tracker also indicates a rebound, but at a quieter 1.8% pace.

One factor that helps drive growth is consumer resilience Inflation accelerated from 8.3% A year ago in April.

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Consumer spending, as measured by personal consumption expenditures, rose 3.1%, better than the first estimate of 2.7%. This came as the labor market remained strong and wages increased rapidly, although still below the pace of inflation.

Initial jobless claims for the week ending May 21 totaled 210,000, down from 218,000 previously. The Ministry of Labor said.

Continuing claims, after settling near their lowest level since 1969, rose for the week ending May 14 to nearly 1.35 million.

Correction: A previous version inserted an incorrect number for weekly unemployment claims.

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