US economy posts surprise contraction, belying solid consumer picture

The US economy shrank for the first time since 2020, reflecting an import surge tied to robust 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 per cent annualised rate in the first quarter following a 6.9 per cent pace at the end of last year, the Commerce Department’s preliminary estimate showed on Thursday. The median projection in a Bloomberg survey of economists called for a 1 per cent increase. 

The report is more an illustration