The final revision of first-quarter gross domestic product confirmed a larger contraction of the U.S. economy than earlier readings has estimated, supporting the view that a recession is either in progress or looming, say economists, as U.S. inflation runs rampant and stocks head for the worst first half of a year since 1970.
The latest report released by Commerce Department on Wednesday showed that gross domestic product, the broadest measure of goods and services produced across the economy, shrank by 1.6% on an annualized basis in the three-month period from January through March. The initial report released in April showed GDP shrank by 1.4% on an annualized basis.
Economists expect some slowdown in the economy as the Federal Reserve continues to bump up interest rates to cool inflation and will be looking for indications of whether a full-fledged recession – defined by two consecutive quarters of contractions – is brewing.
The Atlanta Federal Reserve Bank’s GDPNow tracker indicated earlier this month that the economy could be headed for a second-quarter drop in GDP, after showing the economic growth stalled in the spring to a flat 0% – a steep decline from its previous estimate of 1.3% on June 1 and 0.9% on June 8.
MacDailyNews Take: On the bright side, the bad ship USS Transitory sunk so long ago that a nice coral reef is forming upon its crumpled hulk. At least the fish have a pot to piss in.
‘Tis best to get a handle on inflation, if you know how, while you still can. – MacDailyNews, May 11, 2021
Earlier this year, Interactive Brokers founder Thomas Peterffy said, “Inflation is 7% — 1% or 2% [in interest rate hikes] doesn’t mean anything. If they really wanted to stop inflation, they would have to raise rates to 4%, 5%, 6%.”
Inflation is repudiation. — Calvin Coolidge
When a business or an individual spends more than it makes, it goes bankrupt. When government does it, it sends you the bill. And when government does it for 40 years, the bill comes in two ways: higher taxes and inflation. Make no mistake about it, inflation is a tax and not by accident. — Ronald Reagan
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