Skip to main content

GDP Drops 1.4% in the First Quarter Of 2022

Doug Page
Apr 28, 2022

Residential spending and business spending remain strong

The nation’s gross domestic product dropped 1.4% in the first quarter, down from 6.9% growth in last year’s fourth quarter, the U.S. Commerce Department’s Bureau of Economic Analysis reported today.

“The decrease in real GDP reflected decreases in private inventory investment, exports, federal government spending, and state and local government spending, while imports, which are a subtraction in the calculation of GDP, increased,” the news release said. “Personal consumption expenditures, nonresidential fixed investment and residential fixed investment increased.”

Joel Kan, assistant vice president of economic and industry forecasting for the Mortgage Bankers Association, said the GDP dropped due to a contraction in exports.

“The good news is that consumer spending remained strong, particularly for services, as much of that sector has returned close to pre-pandemic levels,” said Kan. “Households continue to benefit from a strong job market and wage growth.

“Spending on non-durable goods fell for the first time in over a year, potentially impacted by rapidly increasing prices. Business investment had its largest contribution to overall growth in a year, indicating additional underlying strength in the economy,” he added.

Residential spending, the Commerce Department said, was up 2.1% in the first quarter. That number, says the Bureau’s spokeswoman Jeannine Aversa, reflects housing construction, housing starts and home improvement expenditures.

"The drop in GDP was a bit of surprise, but it doesn't really signal a recession," said Duke University economist Connel Fullenkamp. "In fact, one of the reasons for the fall in GDP was the increase in imports, which is a signal of robust consumer spending. Much of the decline in GDP was due to drops in government spending and inventory investment, which look like short-term or one-off phenomena.

"Generally, the consumer spending that is powering the economy still seems pretty robust--and it's incredibly easy to find a job, especially an entry-level job," he added.

It is unknown if the first quarter’s drop in GDP is indicative of what the year will hold. According to the Commerce Department, GDP dropped in the first two quarters in 2020 but increased in the third and fourth quarters of that year.

“The Bureau doesn’t do forecasts of future economic activity,” said Aversa in an email to National Mortgage Professional Magazine. “The number we released today measures activity in the January to March quarter based on available data.”

Published
Apr 28, 2022
LendingTree: 2 In 5 Americans Expect Housing Market Crash In ‘23

Inflation, high interest rates among reasons cited.

Analysis and Data
Dec 06, 2022
Redfin: 2023 Housing Market To Be Slowest In 12 Years

Predicts mortgage rates and affordability challenges will deter would-be homebuyers.

Analysis and Data
Dec 06, 2022
Mortgage Economic Review For December 2022

A summary & review of key economic data that affects the mortgage and real estate business.

Analysis and Data
Dec 05, 2022
November Mortgage Rate Lock Volume Fell 61% YOY

The volume of both rate/term and cash-out refi locks was down more than 86% YOY.

Analysis and Data
Dec 05, 2022
1 In 12 Mortgaged Homes Bought In 2022 Fall Underwater

Black Knight says the housing market correction has only just begun.

Analysis and Data
Dec 05, 2022
Q3 Mortgage Originations Fell 62% YOY

Milliman Mortgage Default Index shows dramatic drop, led by 87% decline in refis.

Analysis and Data
Dec 05, 2022