The U.S. economy shrank for the first time since 2020, reflecting an import surge tied to solid consumer demand.
While the surprise contraction adds to political headaches for President Joe Biden, it’s unlikely to dissuade the Federal Reserve from hiking interest rates aggressively to combat inflation.
Gross domestic product fell at a 1.4% annualized rate in the first quarter following a 6.9% pace at the end of last year, the Commerce Department’s preliminary estimate showed Thursday. The median projection in a Bloomberg survey of economists called for a 1% increase.
