Live Updates: GDP fell 0.4% in the first quarter
The White House dismissed a decline in first-quarter growth due to a quirk in inventories and an increase in imports, pointing out that Thursday’s gross domestic product report also indicated underlying strength in consumer spending.
GDP fell 0.4% in the first quarter after adjusting for inflation, or 1.4% on an annualized basis, the Commerce Department said Thursday. Businesses had been building up inventories in the fourth quarter and building them up more slowly at the start of the year, and imports far outpaced exports as Americans bought goods overseas, driving the decline.
“While last quarter’s growth estimate was impacted by technical factors, the United States faces the challenges of Covid-19 around the world, Putin’s unprovoked invasion of Ukraine and the global inflation from a position of strength,” President Biden said in a statement following the press release, referring to Russian President Vladimir V. Putin. Mr. Biden also noted that “consumer spending, business investment and residential investment have grown at high rates.”
Mr. Biden and the Democrats face a tough midterm election year as inflation rises at its fastest pace in four decades, chipping away at household budgets and eroding consumer confidence. At the same time, the Federal Reserve is raising interest rates to try to prevent rapid price increases from becoming permanent, which could begin to significantly cool the economy just as voters head to the polls.
The administration has tried to attribute high inflation to Russia’s invasion of Ukraine, and in particular to Mr. Putin. While the war pushed up the prices of gas and other commodities, inflation was at its fastest pace in decades even before Russia’s attack.
Republicans have taken advantage of rising prices to blast Mr. Biden’s economic policies. The decline in growth at the beginning of the year, even if it is related to whims, gave them the opportunity to intensify these criticisms.
“Accelerating inflation, a workers’ crisis and the growing risk of a significant recession are the hallmark economic failures of the Biden administration,” Rep. Kevin Brady, a Republican from Texas, said in a statement Thursday. Press.
“The Biden administration has produced the worst inflation in 40 years, the worst labor shortage in history and the weakest consumer confidence since the Great Recession,” said Sen. Tim Scott, a Republican from Caroline from the south, posted on Twitter earlier this week.
The Biden administration has pushed back against Republican criticism, arguing that rapid price increases are all the more reason to shift its policy priorities.
“Congress needs to pass legislation to cut costs and reduce the deficit, lower prescription drug and utility bills for families, and restore fairness to our tax code — without raising taxes on anyone earning under $400. $000 a year,” Biden said in his statement. .