U.S. Economy Shrank by 1.5% in Q1 But Consumers Kept Spending

FILE PHOTO: General view of metal cutting machines inside Gent Machine Co.’s 55-employee factory in Cleveland, Ohio, U.S., May 26, 2021. (REUTERS/Timothy Aeppel/File Photo)

The U.S. economy shrank in the first three months of the year even though consumers and businesses kept spending at a solid pace, the government reported Thursday in a slight downgrade of its previous estimate for the January-March quarter.

Last quarter’s drop in the U.S. gross domestic product — the broadest gauge of economic output — does not likely signal the start of a recession. The contraction was caused, in part, by a wider trade gap: The nation spent more on imports than other countries did on U.S. exports.

Also contributing to the weakness was a slower restocking of goods in stores and warehouses, which had built up their inventories in the previous quarter.

Analysts say the economy has likely resumed growing in the current April-June quarter.

The nation remains stuck in the painful grip of high inflation, which has caused particularly severe hardships for lower-income households.

A poll this month by The Associated Press-NORC Center for Public Research found that Biden’s approval rating has reached the lowest point of his presidency — just 39% of adults approve of his performance — with inflation a frequently cited contributing factor.

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