WASHINGTON, June 29 (Xinhua) -- The U.S. economy shrank at an annual rate of 1.6 percent in the first quarter in the third and final estimate, the U.S. Commerce Department reported Wednesday.
The GDP data for the first quarter marks the U.S. economy's first contraction since the onset of COVID-19.
The decrease in real GDP reflected decreases in exports, federal government spending, private inventory investment, and state and local government spending, while imports, which are a subtraction in the calculation of GDP, increased.
Nonresidential fixed investment, personal consumption expenditures (PCE), and residential fixed investment increased, according to the report.
"In the first quarter, an increase in COVID-19 cases related to the Omicron variant resulted in continued restrictions and disruptions in the operations of establishments in some parts of the country," the department's Bureau of Economic Analysis (BEA) said in the report.
The BEA noted that government assistance payments in the form of forgivable loans to businesses, grants to state and local governments, and social benefits to households "all decreased as provisions of several federal programs expired or tapered off."
With inflation at four-decade high, more and more economists believe that the U.S. Federal Reserve's more hawkish stance could plunge the U.S. economy into a recession.
Even Fed Chair Jerome Powell recently said that recession is "certainly a possibility" though "it's not our intended outcome at all."
International Monetary Fund Managing Director Kristalina Georgieva said Friday that there is "a narrowing path" to avoiding a U.S. recession, highlighting "significant downside risks."
According to the Atlanta Federal Reserve's GDPNow model updated on Monday, the U.S. GDP is estimated to grow at a seasonally adjusted annual rate of 0.3 percent in the second quarter.