🔔 U.S. Economy Contracts for 1st Time Since 2020 📉 Barry Hoey, Broker Owner 🍀 239RealEstateDeals.Com LLC ☘ Southwest Florida 🌴

Dated: May 7 2022

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The nation’s GPD shrank at a seasonally adjusted annual rate of 1.4% in 1Q 2022.  But U.S. consumers and businesses – the economy’s core – remain healthy.

Florida Realtor Magazine 2022 05 06 US Economy contracts for the first time since 2020 after Ukraine Russia China COVID19 coronavirus plandemic and Biden Administration Changes Barry Hoey 239RealEstateDeals.Com LLC

McLEAN, Va. – After a blockbuster 2021, the U.S. economy decidedly came back to earth early this year, contracting for the first time since the second quarter of 2020.

The trade deficit widened and companies pulled back stockpiling, more than offsetting solid consumer spending and business investment.

The nation’s gross domestic product, the value of all goods and services produced in the U.S., shrank at a seasonally adjusted annual rate of 1.4% in the January-March period, the Commerce Department said Thursday. Economists surveyed by Bloomberg had forecast a 1% rise in GDP.

It marks the economy’s worst quarterly showing since the depths of the health crisis in spring 2020 and follows sizzling gains of 6.9% in the fourth quarter and 5.7% for all of last year. That was the strongest annual rise since 1984.

But it doesn’t mean the economy is in a recession, though the odds of a slump already had risen to 20% to 30% over the next 12 months from 15% in 2021, top economists say.

A drop in quarterly output – or even two in a row – doesn’t equate to a downturn. Rather, the National Bureau of Economic Research defines a recession based on a significant decline in economic activity, including employment, retail sales and industrial production.

U.S. consumers and businesses – the core of the economy – remain healthy.

“While the possibility of a 2023 recession can’t be ruled out, current economic momentum in the economy remains too strong for things to suddenly sputter out,” economist Thomas Feltmate of TD Economics wrote in a note to clients.

Inflation eases but remains high

Growth should still be sturdy, if markedly slower, in 2022. But Thursday’s report kicks off an uncertain year for the economy as inflation eases but remains elevated and the Federal Reserve wages an aggressive campaign to fight it with interest rate hikes that could risk a downturn.

In the first quarter, trade accounted for the dismal performance, subtracting more than 3 percentage points from growth.

Exports fell 5.9% as U.S. manufacturers continued to grapple with supply snarls, and foreign countries struggled with COVID-19 flare-ups.

Meanwhile, imports surged 17.7% as a result of American consumers who continued to snap up goods. The combination widened the trade gap.

Firms added to inventories more slowly

Companies bulked up their inventories late last year after drawing them down earlier in response to late deliveries. But they replenished stockpiles so aggressively – adding more than 5 percentage points to GDP growth – that there was bound to be a pullback in the first quarter, says economist Ian Shepherdson of Pantheon Macroeconomics.

Consumer spending, which makes up 70% of economic activity, grew 2.7% following a 2.5% rise late last year. Those are decent numbers, but they pale next to the double-digit advances of early 2021 when the economy was re-opening and federal stimulus checks juiced purchases.

On the one hand, the nation continued to heal from COVID-19 in recent months as cases tumbled after January’s omicron surge, leading many Americans to resume shopping, traveling and dining out. That has partly made up for a cutback in consumers’ spending binges on sofas, TVs and other goods while they hunkered down during the pandemic.

Households also have been bolstered by robust job and wage growth as employers struggle to fill a near-record number of openings. Many people are still out of the labor force – meaning they’re not working or looking for jobs – for COVID-19-related reasons.

But inflation hit a 40-year high of 8.6% in March and the spike in gasoline, food and rent costs has led many households to curtail their discretionary purchases, says Wells Fargo economist Sam Bullard.

Supply chain untangles, but Ukraine, China pose challenges

The supply chain bottlenecks that helped fuel the soaring prices are starting to ease and many economists believe inflation has peaked. But Russia’s war in Ukraine and COVID-19-related lockdowns in China pose new threats to the shipment of goods across the globe.

Bullard expects the economy to grow 2.8% this year, a healthy showing in relation to the pre-pandemic era, but a big downshift from last year’s leap in output.

And the Fed has vowed to bring down inflation with sharp interest rate hikes, raising concerns about whether the central bank can slow the price increases without triggering a recession. Pearce predicted the first-quarter drop in GDP would not keep the Fed from hiking rates by half a percentage point at a meeting next week.

How other parts of the economy performed:

Business investment rebounds

Business capital spending grew a healthy 9.2% after a 2.9% gain in the fourth quarter.

Outlays for computers, delivery trucks, factory machines and other equipment jumped 15.3%. Supply chain snags are easing, spurring businesses to order more vehicles and other equipment that had been in short supply. And persistent w shortages are leading companies to buy more labor-saving technology, says economist Michael Pearce of Capital Economics.

But spending on buildings, oil rigs and other structures edged down 0.9% after an 8.3% decline late last year. Intellectual property spending rose 8.1%, notching strong results for the seventh straight quarter.

Residential investment rises

Housing construction and renovation rose a modest 2.1% following a 2.2% gain the previous quarter.

The industry is facing hurdles such as rising prices and interest rates, along with supply chain problems that have slowed deliveries of materials and pushed up prices.

But low housing inventories mean builders need to put up more homes, and the improving health crisis is coaxing construction workers back to job sites, says economist Shernette McLeod of TD Economics.

Government spending falls

Government spending slid 2.7% after a 2.6% drop the prior quarter. Federal spending declined 5.9% while state and local spending dipped 0.8%.

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Recently as Listing Agents, Barry & Kim with the Hoey Team; 239RealEstateDeals.Com LLC ☘ helped a number of sellers who had been in Foreberance and in similar situations; we were able to get all of them to a "good place"; worry free & stress free; with excellent end results for them.  Also, Kim is a certified stager which helps us additionally on all of our listings.

We help people in many different situations; everybody's situation is different; if you know someone needing help; or simply wants advice, please have them reach out to us in confidence: 239-360-5527; anytime; we continue to achieve and set record setting sales prices in the communities where we list and sell ☘

We also offer a private, custom Concierge Service, if their property needs work 🍀  For every property situation, we have a solution / solutions ☘

As people continue to move in great numbers and relocate to the general areas of Lee & Collier Counties from other parts of the United States, it is important that we are able to serve all of the area; which we do efficently, with the ability offer many different Choices and Lifestyles all of which are in abundance here in SW FLA 🌴  239RealEstateDeals.Com LLC had blanket coverage of Southwest Florida and most of Florida for that matter by being active members of four different MLS systems.

Inventory remains low overall as homes sell quickly; we do continue to list and market new South Florida property listings to the marketplace and we sell many different type homes; Resale & New Construction; Multigenerational Family Compounds, Regular Single Family Homes, Villas, Townhomes and all Condo types, from low rise, to waterfront high rise right on the beach. 

We have also seen an uptake in people planning ahead, and buying that second home now, rather than waitiang as they were planning to do; especially with Snowmads and Zoombirds.  Previously we had Snowbirds; interesting how terminology keeps changing / evolving. 

Lower interest rates (even with recent small fluctuations) are also a contributing factor to the increased sales; oftentimes well over asking price.  Low inventory is still the greatest chalenge for buyers who are not prepared; but if prepared you are ahead of the game; ask how we can help with all of that. 

We recently got a number amazing deals for buyers; even in this Hot Sellers Market; and we are working on others; so there are deals out there; if you work with us, we will find them for you. 

For those relocating to Florida, we are pleased to be able to assist homeowners in other parts of the United States who need to sell to buy here; please reach out today for more information and how you can have a smooth, non-stressful transition / relocation.

At our Real Estate Team; Hoey Team ☘ we have been succesfully working 100% virtually / remotely for the past number of years as we continue to grow; i'm thankful that we already had systems in place to better help sellers and buyer with goal posts continually moving within our industry.

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Also; please check out the other blogs, and tabs to many other Links, Updates, Reports & Stats that we have here on our informational website.  

We hope that you find the information useful.  If you have any questions, please do not hesitate to contact Barry or Kim with the Hoey Team â˜˜ 239RealEstateDeals.Com LLC

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