It’s Thursday, and

Matthew G. Saroff
3 min readApr 29, 2022

The initial unemployment claims fell, to 180K, with continuing claims falling to 1.4 million, but so did Q1 GDP, down at a 1/4% annual rate, about 3% less than forecast:

The U.S. economy shrank in the first quarter as supply disruptions weighed on output, but underlying strength in consumer and business spending suggested growth will soon resume.

The decline in U.S. gross domestic product at a 1.4% annual rate marked a sharp reversal from a 6.9% annual growth rate in the fourth quarter, the Commerce Department said Thursday. The first quarter was the weakest since spring 2020, when the Covid-19 pandemic and related shutdowns drove the U.S. economy into a deep — albeit short — recession.

The drop stemmed from a widening trade deficit. Imports to the U.S. surged and exports fell, dynamics reflecting pandemic-related supply-chain constraints. A slower pace of inventory investment by businesses in the first quarter — compared with a rapid buildup of inventories at the end of last year — also pushed growth down.

In addition, fading government stimulus spending related to the pandemic weighed on GDP.

The really bad news is this:


The GDP report is unlikely to change the Federal Reserve’s plans to raise interest rates rapidly this year, including by a half-percentage-point at a two-day meeting next week. One reason: The report is likely to add to concerns that the economy is growing too fast. Private demand in the first quarter grew at a 3.7% annual rate, well above the 1.8% growth rate the Fed expects for the overall economy over the long run.

I expect the November elections to be a bloodbath, because we will be in a recession.

Supply disruptions are only going to get worse with the war, and the resulting unrest throughout the world, and our system has only become more fragile since the pandemic.