US gross domestic product contracts in Q1


US real gross domestic product decreased at an annual rate of 1.4% in the first quarter, following an increase of 6.9% in the 2021 fourth quarter, the US Bureau of Economic Analysis reported today. The data is based on an advance estimate.

Economists surveyed by Dow Jones had anticipated a gain of 1%, CNBC reported.

The decrease in the first quarter reflected the economic impact of the increase in cases of the Covid-19 omicron variant.

“In the first quarter, an increase in Covid-19 omicron variant cases resulted in continued restrictions and disruptions in the operations of establishments in some parts of the country,” it stated.

“Government assistance payments in the form of forgivable loans to businesses, grants to state and local governments, and social benefits to households all decreased as provisions of several federal programs expired or tapered off. The full economic effects of the Covid-19 pandemic cannot be quantified in the GDP estimate for the first quarter because the impacts are generally embedded in source data and cannot be separately identified.”

Separately, the US Department of Labor reported initial jobless claims fell by 5,000 in the week ended April 23 from the previous week to a total of 180,000. The four-week moving average of claims, however, rose by 2,250 to a level of 179,750.