With a quarter of the economy growing negatively, the figures added to fears that a recession could be looming.
Real gross domestic product fell at an annualized rate of 1.6% from January to March, according to the BEA’s third and final revision for the quarter.
Earlier, advance estimates released in April showed a contraction of 1.4%. Last month, the figure was revised to a 1.5% decline.
The BEA noted that the first-quarter GDP performance included some unquantified impacts from the pandemic and a surge in Omicron variables, which contrasted sharply with the fourth quarter of 2021, when the economy grew at a 6.9% rate from the previous quarter.
However, the first quarter of 2022 marked the beginning of Russia’s invasion of Ukraine, which sent an economic shock to global supply chains as well as food, financial and energy markets.
At home, U.S. inflation surged to its highest level in decades amid ongoing supply chain challenges, rising commodity and labor costs and soaring oil prices.
The BEA attributed the recent 0.1 percentage point decline to slower-than-expected growth in consumer spending, although this was partially offset by a rise in private inventory investment.
Shannon Seery, an economist at Wells Fargo, said the shift in consumer spending estimates puts more emphasis on the latest data on the Personal Consumption Expenditure Price Index, one of the Fed’s preferred measures of inflation. The latest report is scheduled for release on Thursday.
Wells Fargo expects a mild recession in the second quarter of 2023, although strong household finances and solid consumer and business balance sheets should keep this subdued, if at all, quite mild, Seery said.
The advance estimate of GDP performance in the second quarter is scheduled for release on July 28.