STORY: The U.S. economy unexpectedly shrank in the first quarter of 2022, the first decline in nearly two years.
A Commerce Department report showed that gross domestic product or GDP - which measures the output of goods and services - fell at a 1.4% annualized rate in the first three months of the year.
The sudden slowdown - which was in part driven by a decrease in inventories as businesses raced to stock up at the end of last year - comes just as the Federal Reserve is expected to aggressively tighten monetary policy at its meeting next week.
While economists say it's too early to worry about a recession based on Thursday’s GDP report, some market watchers are concerned, as the Fed aims to combat inflation by curbing economic growth.
In a press conference at the White House, President Joe Biden said he wasn't worried, citing solid consumer spending and a strong labor market.
"I'm not concerned about a recession. I mean, you're always concerned about a recession but the GDP fell to 1.4%. But here's the deal. We also had, last quarter, consumer spending and business investment and residential investment increased at significant rates. Both for leisure as well as hard products. No.1. No. 2, the, we are, unemployment is at its lowest rate since 1970."
In fact, even with food and gasoline prices soaring, there is no sign yet of consumers pulling back.
According to data from Bank of America Securities, lower-income consumers, who tend to be disproportionately affected by inflation, were showing greater resilience amid strong wage gains and a tightening labor market.