The U.S. economy shrank at a 1.6% annual pace in the first three months of the year, the Bureau of Economic Analysis said Wednesday.
This represents a slight downgrade from its previous estimate for the January-March quarter.
It was also the first drop in GDP since the second quarter of 2020, when the Covid pandemic was hitting hard the economy, and followed a strong 6.9% expansion in the final three months of 2021.
With one quarter of negative economic growth, the data adds to fears that a recession may be looming.
The annualized 1.6% decline in real gross domestic product from January to March came after the BEA’s third and final revisions for the quarter results.
The first quarter GDP performance stood in contrast to the fourth quarter of 2021, when the economy grew at a rate of 6.9% from the prior quarter.
The first quarter of 2022, however, marked the start of Russia’s invasion of Ukraine affecting global supply chains and several markets, bringing further uncertainty.
Domestically, U.S. inflation has soared to levels not seen in four decades with the Fed hiking rates also in levels not seen in years.
The BEA attributed the latest decline of 0.1 percentage point to slower-than-expected growth in consumer spending.