U.S. GDP down 1.4% in first quarter

The U.S. economy decreased 1.4% in the first quarter of this year, raising fears that it could enter a recession amid soaring inflation, the COVID-19 pandemic, and the global impact of Russia's invasion of Ukraine.

Activity in the world's largest economy contracted 1.4% during the first three months of the year on an annual basis, according to figures released by the government on Thursday, a figure far away from the significant growth of nearly 7% at the end of last year.

This contraction surprised economists, who had forecasted 1% growth for the first quarter of this year. Yet, for a recession to occur, contractions must be registered for several consecutive quarters, explains La Vanguardia.

Two factors affected the economy at the beginning of 2022: private companies reduced their inventories and exports declined.

"The decline in Gross Domestic Product (GDP) reflected reductions in private inventory investment, exports, federal, and local government spending," the government said.

Despite the contraction, the pace of consumption grew by 0.7% in that period, suggesting a key point in the resilience for the U.S. economy.

The figure comes against a complicated economic environment for the Federal Reserve (Fed), the U.S. central bank.

The Federal Reserve plans to continue its rate hike at the May meeting to emphasize the fight against inflation, the country's main problem according to citizen surveys.