US Economy: Shrinking GDP Masks a Broader Recovery

    US Economy: Shrinking GDP Masks a Broader Recovery
    Photo: The New York Times

    The Facts

    • The US economy shrank at an annualized rate of 1.4% in the first 3 months of 2022 according to a new report the US Dept. of Commerce released Thurs.

    • The figures mark the first quarterly decline in GDP since Apr. 2020 - the start of the pandemic - and are in stark contrast to last year's growth rate of 5.7%.

    The Spin

    Right narrative

    Biden's economy is the definition of stagflation, marked by slow or even declining GDP growth and stubborn inflation. The US economy is extremely vulnerable to trade imbalances that are hurting consumers and manufacturers alike, and the Biden admin. and the Federal Reserve are to blame.

    Left narrative

    Economists looking at the bigger picture see plenty of signs for optimism. Consumer spending - the primary engine of the US economy - is on the rise, and so are capital investments by businesses that will spur further production gains. A recession is unlikely with such strong tailwinds.

    Narrative C

    For all the hand-wringing among economists, the real culprit here is the surging US dollar, which continues to gain strength against major foreign currencies like the Yen and the Euro. A strong dollar makes US exports more expensive and imports cheaper. The strength of the dollar should be top of mind for the Biden admin.

    Political split



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