Today, Congressman Don Beyer (D-VA), Chairman of the U.S. Congress Joint Economic Committee (JEC), released the following statement after the Bureau of Economic Analysis (BEA) reported its initial estimate of first quarter gross domestic product (GDP) contracting 1.4%.
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“Today’s headline GDP number is masking the strength of our economy, which is reflected in the underlying measures of demand. What the data show is an economy that is continuing to rebound, but buffeted by the continued effects of the pandemic, especially abroad, and by Putin’s invasion of Ukraine. This underscores the need to prioritize additional funding to overcome the coronavirus worldwide and support Ukraine in its fight for democracy.
“While the headline GDP number isn’t what we hoped it would be, underlying data continue to show strong demand and inflationary pressures easing. Consumer spending rose quite strongly—at 2.7%—which reflects robust household balance sheets. We’re also starting to see a return to more normal levels of spending on services compared to goods. The lopsided spending on goods instead of services during the height of the pandemic contributed to supply chain bottlenecks, so a normalization suggests further progress on inflation is ahead.
“Businesses investment is also way up at 7.3%, contributing more to headline GDP than in the previous two quarters. This indicates that American businesses believe in—and are contributing to—our continued recovery.
“The two biggest drags on the headline GDP number were an imbalance between imports and exports and the normalization of inventory investments. However, these two changes indicate that supply chains are improving and that we are continuing to experience strong domestic demand, even while the pandemic and Putin’s war contributed to weaker demand abroad.
“Congress and the Biden administration have taken significant steps to address pandemic disruptions and put our economy on a trajectory to address long-standing challenges. As a result, the United States has experienced the fastest recovery among G7 countries, and it remains the only major economy that has recovered to its pre-pandemic trend of growth. Going forward, strong consumption and investment growth are expected to return to more normal levels, easing inflation while growing the economy.
“We’ve experienced a labor market recovery that has exceeded all expectations, and to date, nearly 93% of the jobs lost during the pandemic have been regained. The unemployment rate has fallen to just 0.1 percentage points above its pre-pandemic rate, and President Biden has overseen the creation of 7.9 million jobs. However, as global supply-chain disruptions have pushed up prices worldwide, and Putin’s invasion of Ukraine is exacerbating the effects on energy and food prices, higher inflation is denying workers and families the full benefits of the recovery.
“As today’s GDP report shows, there is more work to do. We have a blueprint in the Building a Better America agenda to create high-quality jobs, lower costs for households, mitigate the harmful effects of climate change and promote long-term growth that is broadly shared.”
