In a sign that the radical Far Left policies of Joe Biden and the Democrats are working as intended America’s Gross Domestic Product (GDP) shrank for the first time since the pandemic recession struck two years ago, contracting at a 1.4% annual rate.
The Commerce Department's estimate Thursday of the first quarter's gross domestic product — the nation's total output of goods and services — fell far below the 6.9% annual growth recorded in the fourth quarter of 2021.
The negative growth rate missed even the subdued Dow Jones estimate of a 1% gain for the quarter. GDP measures the output of goods and services in the U.S. for the three-month period, reported CNBC.
The substantial downturn stems from a widening trade deficit, with the U.S. importing far more than it exported: In the three-month period from January to March, imports surged by nearly 20% as businesses and consumers bought more goods from abroad. But exports fell about 6% – an imbalance that widened the trade deficit.
The gap in goods trade, for instance, averaged a record $113 million in the first quarter vs. $87 billion in same quarter one year ago.
The record U.S. trade deficit put a huge dent in first-quarter GDP. Imports soared 17.7% while exports fell by 5.9%. Since 1950 the only other time trade has subtracted as much from GDP was in the early stages of the pandemic in 2020 according to reporting by Market Watch.
The trade deficit by itself reduced GDP by a whopping 3.2 percentage points, the third highest number on record.
The Financial Times reported US growth is being threatened by the highest inflation in 40 years as the Russian invasion of Ukraine has driven up commodity prices and Covid lockdowns in China herald further issues with supply chains. There was further evidence of price pressures in the report: the so-called core personal consumption expenditures price index, which strips out volatile components like food and energy, rose 5.2 per cent, compared with 5 per cent last quarter.
The establishment media said most of the economic weakness stemmed from a soaring U.S. international trade deficit. The problem is that they fail to note, or more probably are intentionally disguising, the fact that this vast reduction in economic output accompanied by inflation is directly attributable to Joe Biden’s policies – especially his energy policy.
By cancelling domestic energy projects and doing almost everything possible to limit or reduce domestic oil and natural gas production Biden guaranteed increasingly expensive energy imports would become an anchor dragging the U.S. economy down.
Gas and energy prices have risen every month Joe Biden has been president, but gas prices shot through the roof in response to Russia's war in Ukraine, which jolted energy markets around the world.
Admittedly, the correlation between oil price increases and economic downturns in the U.S. is not perfect. Not every sizeable oil price increase has been followed by a recession. However, prior to the COVID recession, five of the last seven U.S. recessions were preceded by considerable increases in oil prices.
And, U.S. crude oil imports increased but exports declined during the week ending April 22, the U.S. Energy Information Administration (EIA) said in a report released last Wednesday.
U.S. crude oil imports averaged 5.934 million barrels per day (b/d) last week, up by about 98,000 b/d from the previous week, while crude oil exports averaged about 3.721 million b/d, down by about 549,000 b/d from the previous week, according to the Weekly Petroleum Status Report.
CNN of all outlets seemed to grasp the political effects of this contraction in the GDP was bad news for Democrats, with Chris Cillizza observing:
The news that the US economy unexpectedly shrank over the first quarter of the year is an absolute body blow to Democrats already reeling amid growing economic concerns ahead of the 2022 midterm election.
The country’s gross domestic product fell at an annualized rate of 1.4% between January and March – a stunning reversal from the 6.9% GDP growth that the US recorded in the final quarter of 2021. (The GDP is seen as a broad guide to the overall health of a nation’s economy.)
And in a decidedly ill omen, the GDP shrinkage was the worst performance of the measure since the economy went into recession amid the shutting down of the country in the spring of 2020…
The GDP news comes on the heels of newly released polling data from Gallup that suggested that economy confidence is extremely low among the American public.
More than four in ten (42%) of Americans said that economic conditions in America were “poor,” while another 38% said that they were only “fair” in Gallup’s April survey. Just 2% said economic conditions were “excellent,” while 18% said they were “good.”)
More than three in four – 76% – of Americans said that the economy was getting worse, compared to 20% who said it was improving.
Add all of those factors up, wrote Cillizza, and you get an absolutely toxic political environment facing Biden and Democrats as they prepare to defend their House and Senate majorities in November.
While one quarter does not yet make a trend, it is a warning sign for how the recovery is going: Two straight quarters of declining growth meet a commonly used definition of a recession, a timing factor that would make recession fears a major issue in the 2022 midterm elections.
1.4 percent annual rate
Joe Biden administration
Biden energy policy
2022 midterm elections
Democrat congressional majorities