The unexpected US recession creates Fear
Headline The Bureau of Economic Analysis reported a 1.4% decline in GDP on Thursday. Analysts had predicted a 1% rise.
A federal analysis released Thursday shows that the US GDP has shrunk for the first time since the epidemic began.
Despite expectations that GDP would expand by 1% in the first quarter of 2022, the Bureau of Economic Analysis issued a report showing that it actually decreased by 1.4%.
An economic slowdown that might indicate an impending recession could have an impact on digital assets like bitcoin since their values recently began to fluctuate in sync with equities markets (BTC).
After the study was issued, there was no movement in Bitcoin and the larger cryptocurrency market. For Danielle Booth, CEO of Dallas-based economic intelligence company Quill Intelligence, “the absence of a response in markets indicates the underlying specifics of the report not being as awful as the title implies.”
Consumer spending and corporate investment remained high, indicating that the rebound from the epidemic had not yet slowed. Trade and inventories were the primary drivers of the GDP fall.
“Still a decent pace of economic growth,” stated Ken Kim, a senior U.S. economist at KPMG in a report, when looking at the fourth quarter of 2021 and the first quarter of 2019.
Crypto finance business XBTO’s Joe Haggenmiller says today’s figures indicate that we are closer to a recession than previously imagined. Consequently, if negative growth continues, the stock markets may suffer, and bitcoin may as well, because of its positive connection. “
Though GDP fell in the recent data, many economists aren’t concerned about it because of its robust underlying components (consumption, fixed investment and demand). An economic downturn lasting more than two straight quarters is often considered a recession, therefore the first three months of this year do not necessarily cause alarm.
US economy might slide into recession as early as 2023 according to certain large institutions such as Deutsche and Bank of America. If this negative print was a one and done, then “momentum heading into the second quarter is not substantial enough,” Booth added.