After a very strong year in 2021, the US economy took a hit and contracted in the first quarter of 2022. US gross domestic product (GDP) growth was only 1.4% over the period, according to Wall Street Journal, and therefore has “decline sharply, compared to the 6.9% annualized rate recorded in the fourth quarter of last year”. It had never been so weak since the spring of 2020, when the Covid-19 pandemic and the shutdown of many businesses had dragged the country into a short period of recession.
For the American economic newspaper, this new decline is explained by a slowdown in the pace of business investment. “The widening trade deficit – the United States imports far more than it exports – has also weighed on growth,” secures the title. As “the reduction in public spending, linked to the end of the recovery measures carried out in the face of the pandemic”.
Overall price increase
But economists interviewed by the Wall Street Journal above all monitor the economic policy implemented to deal with inflation. “A sharp rise in prices reduces the purchasing power of households”, explains the New York daily, which states that in March consumer prices increased on average by 8.5% in the United States. This has a direct effect on demand.
In parallel, “rapidly rising prices are a problem for businesses”which are seeing the cost of raw materials rise sharply. “It’s extremely complicated to get your head out of the water with all these rising prices”, explains a San Diego business leader in the pages of the newspaper.
Despite this, the forecasts of experts remain relatively good, as American companies continue to hire workers, going so far as to raise wages amid a shortage of employees. The experts “estimate that in the fourth quarter of 2022, GDP will increase by 2.6% compared to the previous yeardeciphers the American title. This corresponds to the annual growth of 2019.” For this, however, the Fed will have to succeed in containing the rise in prices.
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