Economy shrinks in first quarter

A report released Thursday indicated the first U.S. economic contraction since the initial pandemic crash in 2020. Soaring imports and fewer exports drove the 1.4 percent decline in gross domestic product in the first quarter of 2022. Businesses also spent less restocking their shelves than they did at the end of 2021.

Is a recession on the way? Speaking at a Brookings Institution conference, U.S. Treasury Secretary Janet Yellen said the economic turbulence did not come as a surprise. She said the pandemic and Russia’s invasion of Ukraine exacerbated ongoing economic downturns and increased the likelihood of disruptions. But analysts say the drop in GDP does not signal a looming recession. Americans continue to spend at high rates, thanks in part to rising wages. The job market remains strong, with the unemployment rate near a 50-year low of 3.6 percent. Inflation remains a significant concern. Last month, prices jumped 8.5 percent from a year earlier, the fastest such rise in four decades.

Dig deeper: Listen to financial analyst David Bahnsen discuss the first quarter and the Federal Reserve with Nick Eicher on The World and Everything in It podcast.