US Q1 GDP Final Figure -1.6%... Revised Down by 0.1%P

[Asia Economy New York=Special Correspondent Joselgina] The U.S. Department of Commerce announced on the 29th (local time) that the GDP growth rate for the first quarter of this year was finally estimated at an annualized -1.6%. This is a 0.1 percentage point downward revision from the preliminary figure (-1.5%) released last month. The U.S. growth rate is announced three times: as a flash estimate, preliminary estimate, and final estimate.

This is the first time since the early spread of COVID-19 in the first and second quarters of 2020 that the U.S. quarterly growth rate has turned negative. Generally, if GDP growth records negative figures for two consecutive quarters, it is considered a technical recession. In the U.S., the National Bureau of Economic Research (NBER) officially declares a recession.

However, the negative growth in the first quarter is analyzed to be due to trade deficits and a decrease in corporate inventory investment. The economic fundamentals themselves were evaluated as favorable, with increases in personal consumption expenditures and corporate investment.

Meanwhile, inflationary pressures in the U.S. persisted. The personal consumption expenditures (PCE) price index rose 7.1% quarter-over-quarter in the first quarter. The core PCE, which excludes volatile food and energy prices, increased by 5.2%. Consumption, which accounts for two-thirds of U.S. economic activity, slowed down. Personal consumption expenditures in the first quarter increased by 1.8%, falling short of the preliminary estimate of 3.1%.

To curb soaring inflation, the central bank, the Federal Reserve (Fed), has embarked on aggressive monetary tightening, raising ongoing concerns about a recession. Earlier, the World Bank revised down the U.S. growth rate for this year by 1.2 percentage points to 2.5% from its previous forecast.