US Economy declines by one and a half percent given the Russia-Ukraine

Washington: Rising inflation, reduction in government expenses and the increasing trade deficit has triggered a decline of one and a half per cent in the US economy. By the end of 2021, a growth of 6.9% was recorded in the US economy. Against this background, this decline comes as a shock. A few days ago, the US stock markets also reported a crash. Analysts have warned of the US economy going into recession given the crash in the stock markets, increasing inflation and a slide in the GDP.

On Thursday, the US Bureau of Economic Analysis released a report on the US economy. This has reported a decline of 1.5% in the growth rate for the January to March quarter. The Bureau of Economic Analysis clarified that the rising inflation, reduction in the government expenditure, decline in investments by the private sector and the increasing trade deficit are the factors responsible for the decline. For the January to March quarter, the US imports were more than the exports. Therefore, the US trade deficit has reached record levels. The growth rate took a hit of 3% given the trade deficit. Although the US imports have increased the storage process by the big industries has slowed down. Bureau of Economic Analysis noted that this also has hit the economy.

Inflation in the US has already reached record levels given the Russia-Ukraine conflict. The inflation index scaled a record level of more than 8% in April. The Russia-Ukraine conflict and the Corona outbursts in China deliver jolts to the US industrial sector. The US companies are also being affected, given the disruptions in the supply chain. The extent of Coronavirus also has declined and the government expenditure has reduced accordingly. It is said that this will also affect the GDP. This is the first decline in the US economy since 2020.

A few days ago, Ben Bernanke, former Chief of the US Federal Reserve, warned of the looming threat of recession in the US economy. Bernanke pointed to the decline in the US economy, saying that inflation has flared up greatly in the country. Unemployment is also seen increasing, and the situation could continue for the next one of two years. Before Bernanke, Lloyd Blankfein, chief of Goldman Sachs, and financial institutions Fannie Mae and Bank of America warned about the recession.