The Commerce Department reported Thursday that the U.S. economic contraction to start the year was worse than expected as weak business and private investment failed to offset strong consumer spending.
The second estimate from the Bureau of Economic Analysis shows that GDP declined in the first quarter. That was worse than the estimate of 1.3% by the stock market.
Downward revisions for private inventory and residential investment offset an upward change in consumer spending. The trade deficit subtracted from the GDP total.
The Q2 of 2020 was the worst quarter since the US fell into a recession due to a government-imposed economic shutdown. The GDP plummeted in that quarter.
Some of the factors holding back growth early in the year are expected to abate in the second quarter. Supply chain issues contributed to a 40-year high in inflation, as a surge in the omicron variant slowed activity.
CNBC's Rapid Update survey shows a median expectation of 3.3% growth in the second quarter, but the Atlanta Fed's GDPNow tracker shows a more subdued 1.8% pace.
This year will be mixed. Growth will not match what has been seen since the economy reopened, according to Scott Hoyt, senior director at Moody's Analytics.
A resilient consumer fighting through inflation is one factor helping to propel growth.
Personal consumption expenditures increased 3.1%, better than the first estimate. Wages are increasing rapidly but still below the pace of inflation as the labor market has continued to be strong.
The Labor Department reported a decrease in initial jobless claims for the week ended May 21.
For the week ended May 14th, continuing claims rose to nearly 1.35 million, after holding around their lowest level since 1969.
The figure for weekly jobless claims was incorrect.
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