Inflation is squeezing households as gas and food prices spike, borrowing costs mount and the global economy is rattled by Russia’s invasion of Ukraine and China’s COVID lockdowns.
That may bring little comfort to President Joe Biden and Democrats, who face mid-term elections this year in which rising prices for food, energy and other essentials will be a major theme of Republican opposition.
As a result, first quarter GDP — the nation’s total output of goods and services — fell far below the 6.9% annual growth rate in the fourth quarter of 2021. Economists consider these trends a better gauge of the economy’s core strength than the latest GDP figure. The first quarter’s weak showing contrasts with last year’s robust rebound from the pandemic, which was fueled in part by vast government aid and ultra-low interest rates. With stimulus checks and other government supports having ended, consumer spending has slowed from its blistering pace in the first half of last year.
“Just about every aspect of doing business has gotten significantly more expensive,” said Doug Willmarth, the company’s president. The global economy is expected to grow more slowly this year, according to the International Monetary Fund. It foresees the Ukraine war and COVID slowing global growth to 3.6% this year, down from 6.1% last year.
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