Economics
U.S. Economy Posts Surprise Contraction, Belying Solid Consumer Picture
- GDP declines an annualized 1.4% on huge rise in trade deficit
- Pace of consumer spending growth, business investment pick up
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The U.S. economy shrank for the first time since 2020, reflecting an import surge tied to solid consumer demand -- which in turn suggests growth will return imminently.
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.