The US economy shrank at a 1.4% annual rate last quarter despite solid spending by consumers and businesses. This is the first contraction since the early days of the pandemic. This is also the first advance estimate so we will likely have a revised number in the following weeks.
The expectation for growth was low, at 1% but this wasn’t expected. There are a couple of factors, the first being omicron which really at the beginning of the year was significant deadweight on the economy and for the last month of the quarter you had the was in Ukraine and what that did to gas prices. Overall, we’re seeing the effects of inflation in consumer spending but also a lot has to do with inventory reductions.