U.S. GDP contracted more than expected in first quarter of 2022

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U.S. GDP contracted more than expected in first quarter of 2022

The Bureau of Economic Analysis estimates that the U.S. economy contracted more than anticipated in the first quarter of 2022, more than anticipated, according to a third and final estimate by the Bureau of Economic Analysis. Real gross domestic product GDP contracted by 1.6% in the first quarter, more than the previously estimated 1.5% contraction, according to the BEA. The revision to personal consumption expenditures PCE was partially offset by an upward revision to private inventory investment, which has resulted in a change in the third estimate. GDP went up by 6.9% in the fourth quarter of 2021, according to the fourth quarter of 2021.

This contraction marks the first GDP decrease since the second quarter of 2020, when the U.S. was in the middle of the COVID-19 recession.

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A recession occurs when the economy sees two consecutive quarters of economic contraction. After the decrease in the first quarter of this year, all eyes will be on the next GDP reading to be released on July 28th to determine whether the U.S. is currently in a recession.

Gary Black, the managing partner of The Future Fund LLC, shared his reaction to the first quarter GDP reading on Twitter.

Black tweeted that the US final 1Q GDP -- 1.6% put the economy on track for back to back negative qtrly GDP readings, which is a recession. Fed s aggressive tightening policy to fight Covid driven inflation that is already in retreat will likely cause rate hikes after July 50 - 75 bp increase. However, another economist remains optimistic. Mike Schenk, Credit Union National Association chief economist, said in a statement that while interest rates are rising and inflation is at a 40 year high, he remains positive about the possibility of a recession.

If you asked me to put a percentage on the prospects for the recession, I would say, at the moment, maybe somewhere in the neighborhood of 35% to 40%, Schenk said. We are looking at all this data in real-time, so we have to adjust our outlook based on that. I'm still relatively upbeat at the moment. The Federal Reserve may continue to raise interest rates in order to bring it back down despite the struggling economy and increased risk of recession.

The Federal Reserve was the highest rate hike since 1994, with 75 basis points at the June meeting. Prior to that, the Federal ReserveFederal Reserve was by 50 basis points in May and 25 points in March. The Fed is expected to raise rates several times this year and into 2023.

If you want to take advantage of interest rates now before they move higher, you could consider refinancing your mortgage to reduce your monthly payments. You can email The Credible Money Expert at Money Expert.com and ask a question. It might be answered by Credible in our Money Expert column.