G.D.P. Report Shows U.S. Economy Shrank, Masking Broader Recovery
That lede and the graph below is all that voters in 2022 and 2024 will remember.
Despite the contraction in the first quarter, consumer spending and business investment suggested the recovery remained resilient.
Despite the resilient recovery all voters will remember is that the economy contracted in the first quarter.
The overall figure understates the recovery because inventories needed less rebuilding and consumer spending widened the trade deficit.
Despite the overall figure understating the recovery, all voters will remember is that the economy contracted in the first quarter of President Biden's second year
The U.S. economy contracted in the first three months of the year, as supply constraints at home, demand shortfalls abroad and rapid inflation worldwide weighed on an otherwise resilient recovery.
Whatever the reasons all voters will remember is that the U.S. economy contracted in the first three months of President Biden's second year.
Gross domestic product, adjusted for inflation, fell 0.4 percent in the first quarter, the Commerce Department said Thursday. It was the first decline since the early days of the pandemic, and a sharp reversal from the rapid 1.7 percent growth in the final three months of 2021.
Seven months before the mid-term elections all that voters will remember is that the GDP fell 0.4% in the first quarter of President Biden's second year.
But the negative number masked evidence of a recovery that economists said remained fundamentally strong. The decline — 1.4 percent on an annualized basis — mostly resulted from the way inventories and trade figure in the calculation, as well as reduced government spending as Covid-19 relief efforts wind down. Measures of underlying demand showed solid growth.
Despite the masking of evidence of a fundamentally strong recovery all that voters will remember in November is that the economy shrank in the first three months of President Biden's second year.
Most important, consumer spending, the engine of the U.S. economy, grew 0.7 percent in the first quarter despite soaring gas prices and the Omicron wave of the coronavirus, which restrained spending on restaurants, travel and similar services in January.
Most important for voters in November 2022 and November 2024 is that inflation reaches a 40-year high and the U.S. economy shrank in the first quarter of President Biden's second year.
“Consumer spending is the aircraft carrier in the middle of the ocean — it just keeps plowing ahead,” said Jay Bryson, chief economist for Wells Fargo.
What voters will remember in November 2022 and November 2024 is that the aircraft carrier of the U.S. economy was hit by Neptune missiles that inflicted damaging inflation at a 40-year high and that the economy listed at an annual rate of 1.4% in the first three months of President Biden's second year and they will rout Democrats in November 2022, take back the House of Representatives and probably the Senate and will probably be favorited to win back the presidency in Nov. 2024.
The voting public views the first year and one-half of Biden's presidency as an unmitigated failure. As a WaPo columnist wrote today, if, as is likely, Russia defeats Ukraine eventually, American voters will blame Biden, not Putin. There is time for Biden to recover but no compelling path to recovery. The Biden presidency will be viewed as an aberrant interregnum between two authoritarian administrations, if, as seems a foregone conclusion, both houses of Congress are lost in November 2022 and the presidency in Nov. 2024. Authoritarian American will re-intrench and will be even more difficult, if not impossible, to dislodge in elections subsequent to 2024 and beyond. The authoritarian takeover of America will be solidified and the lights will go out on Democracy in America.
