U.S. economy declines 1.4% from last quarter

The U.S. economy retreated last quarter by a 1.4% annual rate, the first decline since the pandemic recession hit two years ago, but strong consumer and business spending continues, according to a report from the Associated Press. The overall decline in the economy during the January–March quarter does not indicate a recession is likely in the coming months since most economists expect a rebound this quarter.

Steady consumer and business spending suggests that the economy will keep expanding this year even though the Federal Reserve plans to raise rates aggressively. In addition to a drop in business inventories and a widening trade deficit, the first quarter’s weak showing also reflected a slowdown from last year’s robust rebound from the pandemic, which was fueled in part by vast government aid and ultra-low interest rates.

Imports surged in the first quarter, a sign that some supply chain issues have eased. Additionally, the U.S. job market — the most important pillar of the economy — remains robust. The number of people receiving unemployment benefits fell to the lowest level since 1970.