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US: unexpected economic decline in the first quarter. Trade balance disaster, but now the weapons will take care of it …

Photo by Liam Martens on Unsplash

Bad, and unexpected, news from the US, which hit the stock market hard. The US economy recorded an annualized contraction of 1.4% qoq in the first three months of 2022, well below the market forecast of a 1.1% expansion and after a growth of 6.9. % in the fourth quarter of 2021 , mainly due to a record trade deficit and a decline in inventory investments. Exports decreased by 5.9% (from 22.4% in the 4th quarter), while imports increased by 17.7% (from 17.9% in the 4th quarter). Meanwhile, the growth of gross domestic private investment slowed down sharply (2.3% versus 36.7%). Furthermore, public spending further decreased (-2.7% against -2.6%). On the other hand, consumption (2.7% versus 2.5%) and fixed investments (7.3% versus 2.7%), in particular non-residential ones, contributed positively to GDP.

So the strong dollar did not do well for the US economy by keeping the trade deficit at its highest, or rather by keeping it at its highest. A situation that makes the US economic system highly unbalanced and, frankly, the need to reduce domestic demand or devalue.

There are not only negative news, but also positive ones: consumption and investments remain healthy and high, and therefore indicate the cure: devaluation. A cure that, however, would also have the aftertaste of an increase in inflation that Washington cannot easily afford now, even if it can always blame Russia. Consumer spending

Investments

As we wrote previously, there has been a decline in public spending , even if this does not count the contributions to the private economy, but now there will be new investments in defense and infrastructure. However, soon the GDP could be readjusted with a greater export of the least useful good on earth, from a productive and economic point of view, weapons. With 33 billion allocated to Ukraine, we will have a destructive and devastating stimulus to exports.


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The US article: unexpected economic decline in the first quarter. Trade balance disaster, but now the weapons will take care of it… it comes from ScenariEconomici.it .


This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/us-inaspettata-decrescita-economica-nel-primo-trimestre-disastro-bilancia-commerciale-ma-ora-ci-penseranno-le-armi/ on Fri, 29 Apr 2022 06:00:54 +0000.