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The US grew negative in the first quarter

Data released on April 28 showed that the GDP of the world’s second largest economy unexpectedly decreased by 1.4% in the first quarter of the year.

Experts say that a decline in GDP does not mean that the US is about to fall into a recession. Because this metric is influenced by many temporary factors, such as a huge trade deficit due to supply chain disruptions.

“This is a surprising number, but we shouldn’t panic,” said Mark Zandi, an economist at Moody’s Analytics. . US GDP is forecasted to increase again in the second quarter.

Consumption – the main driver of the economy – accelerated in the first 3 months of the year. Personal spending increased 2.7% year-on-year. Companies also spend more on machinery, buildings, and software. Business investment skyrocketed with 9.2% year-over-year. This rate is 3 times higher than the previous quarter.

“Basic demand is still strong and the job market is pretty good right now,” said Gus Faucher, an economist at PNC.

Imports spiked in the first quarter as supply in the US could not keep up with rising demand. The trade deficit thus “contributes largely to the decline in GDP,” Goldman Sachs said.

In addition to trade reasons, the US GDP is also under pressure because of Covid-19. The fast-spreading strain – Omicron – has caused many businesses to close. Some support policies during the pandemic have also been gradually withdrawn or stopped altogether.

US President Joe Biden also said yesterday that he was “not worried about a recession” as fundamentals remained firm. “I think growth is influenced by everything related to Covid. Covid disruptions are everywhere,” he said.

However, the US economy still faces many risks, most notably inflation. The possibility of falling prices is not great right now, due to the blockade policy in China and the conflict in Ukraine.

Ha Thu (according to CNN)

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