US economy shrinks, threats loom, but growth likely to last

By CHRISTOPHER RUGABER
AP Economics Writer

WASHINGTON (AP) — The U.S. economy shrank last quarter for the first time since the pandemic recession struck two years ago, contracting at a 1.4% annual rate, but consumers and businesses kept spending in a sign of economic durability. The economy’s overall decline in the January-March quarter does not mean a recession is likely in the coming months. Most economists expect a rebound as solid hiring and wage gains sustain growth. Instead, the steady spending by households and companies suggests that the economy will likely keep expanding this year even though the Federal Reserve plans to raise rates aggressively to fight inflation. The first quarter was hampered mainly by a slower restocking of goods and by a sharp drop in exports.