The U.S. economy unexpectedly declined at an annualized rate of 1.4%, an abrupt reversal of last year’s strong growth, according to data from the Bureau of Economic Analysis on Thursday.
The surprising shrinking of the national economy comes after a 6.9% growth pace recorded in the fourth quarter of 2021 and it marks the worst performance since the pandemic recession in the second quarter of 2020.
Some of the factors driving the decline, according to BEA, were a reduction in retailers’ inventory purchases and a growing gap between U.S. exports and imports.
Record inflation has also seen prices rise 8.5% in the past year. The Federal Reserve began raising interest rates last month to keep soaring prices in check and another rate hike could happen next week.