Pulling Back The Curtain On The ‘Real’ US Economy

Revised numbers on US GDP from the Bureau Of Economic Analysis indicate that the economy faces a deeper contraction than originally reported.  GDP shrank in the first quarter of 2022 by 1.6%; this is an impressive and sharp reversal from the fourth quarter of last year, which saw GDP grow by 6.9% due primarily to the continued circulation of covid stimulus dollars and consumer credit spending.

It’s important to keep in mind that this plunge in GDP occurred BEFORE the Federal Reserve started raising interest rates.  Meaning, the Fed did in fact raise rates into economic weakness, much like they did during the onset of the Great Depression, causing even more damage to the economy in the process and prolonging the effects of the crisis.  The difference this time is that we do not face a standard deflationary threat, but a stagflationary one.  It’s a completely different ballgame.