US growth recorded an unexpected decline in the first quarter of the year, with the gross domestic product contracting by 1.4%, but the economy “remains strong”, as Joe Biden said, citing “technical” factors to explain this decline.
The rate of decline in the gross domestic product of the world’s largest economy is calculated on an annual basis. But compared to just the last quarter, the decline was 0.4%, according to Commerce Department data. This is while analysts expected a growth of 1.1%.
“The United States is facing the challenges of COVID-19 around the world, the unjustified invasion of Ukraine by Russian President Vladimir Putin, and global inflation,” the US president said in a statement.
Then he stressed during a press conference that he was “not concerned” regarding the risks of a recession, and highlighted the consumer spending of households and companies and the drop in the unemployment rate to the lowest level in history.
However, the first quarter represents a clear reversal of the trend compared to the annual growth rate of 6.9% recorded in the fourth quarter of 2021. This underperformance will greatly complicate the task of the US Central Bank, which was aggressively planning to raise interest rates, to curb inflation.
This quarter is the weakest since the spring of 2020, when the pandemic plunged the US economy into a deep recession.
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A failure in performance greatly complicates the task of the “reserve” to raise interest rates
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Between January and March, the world’s largest economy was affected by a wave of mutant omicron and persistent supply chain problems.
A few economists recently warned of the possibility of a short-term recession, pointing to a range of factors affecting the economy starting with inflation at a pace not seen since the early 1980s.
In the first quarter, consumer prices rose 6.3% year-on-year, according to the US central bank’s personal consumption expenditures inflation index published with gross domestic product Thursday.
However, it takes two consecutive quarters of GDP contraction for an economy to be considered a recession; So we will have to wait until the end of the second quarter to find out the answer.
In addition to inflation, companies face labor shortages due to mass retirements and millions quitting each month to get a better-paying job.
“strong at the moment”
At the same time, the Commerce Department reports a decrease in government aid, a decrease in exports (-5.9%) and public spending of the federal state (-5.9%), while imports increased by 17.7%.
The Russian-Ukrainian war, which began on February 24, has exacerbated problems in global supply chains and inflationary pressures.
However, most economists believe that the US economy is still strong thanks to strong consumption, which is the historical engine of US growth.
These expenses increased in the first quarter by 2.7%, compared to 2.5% in the fourth quarter of 2021.
“Weak on the surface but strong in substance,” Gregory Dacoe, chief economist at EY Parthenon, wrote on Twitter, taking care to add in parentheses: “For the time being.”
Lydia Bosor, an economist at Oxford Economics, commented, “The first contraction in GDP since the end of the recession is sure to fuel fears of a slowing economy, but the report is not as worrisome as it appears if carefully examined.”
But the outlook remains highly uncertain, with the war in Ukraine slowing growth in most countries of the world, and China’s policy continuing; The lack of tolerance for COVID-19 is exacerbating supply problems.
Attention now turns to the Central Bank, which meets on Tuesday and Wednesday. Chairman Jerome Powell said last week that the bank was considering raising key interest rates faster than expected.
“The positive trend in consumer spending and business investment” should encourage the Federal Reserve to move forward, said Rubella Farooqi, an economist at High Frequency Farooqui.
Joe Biden once more urged Congress to vote on his investment plans.
(AFP)
Monthly Archives
April 2022
Kyiv: Pause in Russian ground attacks in eastern Ukraine
written by Alexandra Hartman Editor-in-Chief
According to Ukrainian information, the Russian armed forces have temporarily suspended their ground attacks in eastern Ukraine during the night. “In the direction of Izyum (the enemy) did not carry out any active offensive actions,” the Ukrainian General Staff said in its situation report this morning.
The Russian forces limited their activities to reconnaissance and artillery shelling. The area around Izyum in the Kharkiv region has been the main target for Russian troops in recent days. The Ukrainian forces in the Donbas were to be encircled by the push to the south.
Things also remained relatively calm on other front sections. The Ukrainian general staff also reported artillery fire off Donetsk, but no further assault attempts. In Mariupol, the surrounded units in the Azov-Stahl steelworks would be further blocked, it is said.
According to the General Staff, the Ukrainian army also limited itself primarily to defensive work. 15 flying objects were shot down during the night: in addition to an airplane, five cruise missiles and nine drones. The reports might not be verified independently.
Quebecer Jonathan Huberdeau has raised the white flag in the race for the Art-Ross trophy, awarded annually to the top scorer in the National League, he who will not be playing the Florida Panthers Thursday in Ottawa once morest the Senators.
• Read also: NHL: the last six Quebecers to have smashed the bar of 100 points
Panthers head coach Andrew Brunette confirmed hours before the opening puck drop that his forward – second in league scoring Bettman with 115 points – will be out, along with several other team stars, including Aleksander Barkov and Claude Giroux.
This means that it is once morest the Montreal Canadiens, Friday at the Bell Center, that Huberdeau will have one last chance to lace up the skates before the playoffs. He trailed Connor McDavid by seven points heading into Thursday’s games and the Edmonton Oilers rep extended that lead by adding an assist in a 5-4 overtime win over the San Francisco Sharks. Joseph.
Moreover, Johnny Gaudreau took advantage of the Quebecer’s absence to catch up with him in second place in scoring. The Flames forward scored a goal, reaching all 40 goals this season, in addition to amassing an assist, in a 3-2 loss to the Minnesota Wild. Leon Draisaitl is fourth with 110 points, adding one to the Oilers’ win.
Wall Street ends up sharply, boosted by corporate results
written by Alexandra Hartman Editor-in-Chief
The New York Stock Exchange ended a session rich in results from robust companies on Thursday sharply higher.
According to final results at the close, the Dow Jones index gained 1.85% to 33,916.39 points. The Nasdaq climbed 3.06% to 12,871.53 points. The S&P 500 rose 2.47% to 4,287.50 points.
“US stocks ended solidly higher, with technology stocks leading the way, amid another strong earnings session,” Schwab analysts said.
Facebook (Meta), which had announced better than expected profits the day before, was the star of the show, the action climbing 17.59% to 205.73 dollars. This notably allowed the Nasdaq to post its best session in six weeks.
On the macro-economic level, investors were hardly concerned by the disappointing first estimate of the Gross Domestic Product of the United States for the first quarter of 2022.
US GDP contracted 1.4% year-on-year as inflation weighs on consumer spending.
This unexpected halt, while analysts were still hoping for growth of 1.1% from January to March, comes in the context of inflation exacerbated by the war in Ukraine and persistent supply problems.
Twitter climbed 0.97% to $49.11. The group, which is to come under the leadership of Elon Musk, the boss of Tesla, announced on Thursday a turnover slightly below expectations in the first quarter but a significant growth in its number of employees. subscribers.
The social network, which is to be bought for 44 billion dollars and which is undoubtedly one of the last account publications since Elon Musk wants to delist it, recorded from January to March 1.20 billion dollars in revenues, less than the 1.22 billion expected by the market.
Its number of active users rose to 229 million, better than the anticipated 226.1.
McDonald’s was praised (+2.85% to 254.19 dollars), exceeding expectations in the first quarter thanks in particular to increases in the prices of its menus and despite 127 million dollars in costs linked to the suspension of its activities in Russia. The fast-food chain saw its turnover increase by 11% over the period, to 5.7 billion dollars.
The title of the American manufacturer of machinery, equipment and construction equipment Caterpillar fell slightly (-0.71% to 212.44 dollars), despite better than expected results, thanks to strong demand.
But the construction equipment giant expects less growth in its activities in China.
The American laboratory Merck saw its shares jump 4.94% to 88.58 dollars as its results were boosted by its new anti-Covid treatment molnupiravir, which it sold for 3.2 billion dollars, and by its cancer drug Keytruda.
Revenue for the company, known as MSD outside North America, rose 50% over the period to $15.9 billion. Net profit soared 57% to $4.2 billion.
All S&P sectors ended in the green, led by information technology (+4.04%), communications (+3.88%), energy (+3.13%) while oil prices ended up.
After the close, however, Amazon delivered bad news, posting a quarterly loss on its investment in automaker Rivian. In post-market trading, the stock fell more than 9% to $2,610.
Apple, on the other hand, advanced 1.69% to 166 dollars in trading following the close. The firm at the apple achieved a turnover up 9% over one year from January to March, growth certainly slowed down but better than expected.
In the bond market, yields on 10-year Treasury bills were stable at 1.83%.
Nasdaq