The U.S. economy plunging into a recession was always going to be next shoe to drop.
“Gross domestic product fell in the first quarter, as businesses slowed their inventory buildups and exports declined. It is the first negative growth number for the U.S. economy since the spring of 2020 at the onset of the pandemic.
Driving the news: The economy contracted at a 1.4% annual rate in the first three months of the year, the Commerce Department said Thursday. That compares with 6.9% growth in the fourth quarter of 2021. …
Trade subtracted 3.2 percentage points from overall GDP growth, as exports fell sharply and imports soared. This reflects a U.S. economy with significantly stronger domestic demand than the rest of the world. …”
Is anyone surprised?
I had a hard time believing that this war in Ukraine would be allowed to explode before the midterms given the predictable effect that it would have on supply chain issues, energy prices and inflation. I assumed that Antony Blinken would find some way to kick the can down the road.
“Figures this week showed the US trade deficit in goods reached a record high last month, as coronavirus cases triggered shutdowns in China and the war in Ukraine upended key industries, including agriculture and oil.
Analysts said the unexpectedly large surge in imports, which count against US output in calculations of GDP, was probably due to businesses accelerating purchases.
Meanwhile exports fell, hurt in part by lower demand abroad. …”
Usually, we are the ones who are complaining about globalization and the negative consequences of international trade, but in this case we largely opposed the effort by the establishment to wage total economic war against Russia. We warned that it would have all sorts of negative unforeseen downstream consequences on the economy like the spikes in fertilizer, metals and oil prices.
Note: The only reason gas prices have gone down a little is because of the lockdowns in China.