Despite recent recovery, the US economy took a turn for the worse in the first quarter of 2022. A widening trade deficit, facilitated by ongoing supply chain disruptions, and slowing inventory investment have pressured overall economic growth.
Consequently, real GDP has been adjusted to decrease at an annualized rate of 1.4% in the first quarter of 2022, marking the first decline since the start of the COVID-19 (coronavirus) pandemic. Supply chain disruptions have been the main driver of declining GDP as inflation has continued to increase to 40-year highs while the United States continues to import goods to meet domestic demand. As consumer spending, business investment and the unemployment rate have continued to improve, the Federal Reserve has maintained its plans to raise interest rates to temper the acceleration in economic activity. However, this has intensified concerns of an impending recession.