US posts surprise Q1 contraction, belying solid consumer demand

Still, real final sales to domestic purchasers, a measure of underlying demand that strips out the trade and inventories components, increased an annualised 2.6%, an improvement from the 1.7% pace in the fourth quarter.

NEW YORK: The United States economy unexpectedly shrank last quarter, the first contraction since 2020, as a ballooning trade deficit and softer inventory growth belied an otherwise solid consumer and business demand picture.

Gross domestic product (GDP) fell at a 1.4% annualised rate after a 6.9% pace of growth at the end of 2021, the Commerce Department’s preliminary estimate showed. The median forecast in a Bloomberg survey of economists was for a 1% increase.