GDP contracted at a 1.4% annualized rate in the first quarter, the Bureau of Economic Analysis reported Thursday morning, meaning that slowing commerce added to the woes of high inflation.

The decline in GDP, which is adjusted for inflation, is a major reversal from the previous quarter, when growth soared to a 6.9% rate as businesses began healing faster from the pandemic.

Friday’s report means that President Joe Biden now has to contend with economic contraction in addition to the soaring inflation that has strained households and driven down his approval ratings.

Still, details within Thursday’s report showed that underlying momentum is stronger than the headline number would make it seem. Much of the decline in the first quarter was driven by a surge in imports, which subtract from GDP but don’t mean that the drivers of growth are weak. A decline in businesses buying inventories also shaved about 0.8 percentage points from the overall GDP growth rate, but inventories are not connected to future growth.

This is a developing story and will be updated.

Original Location: Major disappointment: Economy shrank at 1.4% annual rate in first quarter

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