The Bureau of Economic Analysis (BEA) released today (5-26-22) its “second estimate” of real gross domestic product (GDP) for Q1 of 2022. According to the report, real GDP in Q1 declined at an annual rate of -1.5%. This follows a 6.9% increase in GDP in Q4 of 2022.
The GDP estimate released today is based on more complete source data than were available for the “advance estimate” issued last month. In the “advance estimate,” the decrease in real GDP was -1.4%. The update primarily reflects downward revisions to private inventory investment and residential investment that were partly offset by an upward revision to consumer spending.
The decrease in real GDP reflected decreases in private inventory investment, exports, federal government spending, and state and local government spending, while imports, which are a subtraction in the calculation of GDP, increased. Personal consumption expenditures (PCE), nonresidential fixed investment, and residential fixed investment increased.
The BEA notes that in Q1 of 2022, an increase in COVID-19 cases related to the Omicron variant resulted in continued restrictions and disruptions in the operations of establishments in some parts of the country. 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.
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