Concerns over recession grow

LONDON, May 12, (AP): Britain’s economy grew at the slowest pace in a year during the first quarter as retailers and manufacturers were hurt by supply disruptions and higher prices, raising concerns that the country may be headed for a recession.

Gross domestic product, the broadest measure of economic activity, rose 0.8% in the period, slowing from 1.3% in the previous quarter, the Office for National Statistics said Thursday. Monthly estimates indicate GDP shrank by 0.1% in March.

The figures “suggest the economy had less momentum than we thought even before the full hit from the cost of living the fewest since January 3, 1970.

American workers are enjoying historically strong job security two years after the coronavirus pandemic plunged the economy into a brief but devastating recession. Weekly applications for unemployment aid have been consistently below the pre-pandemic level of 225,000 for most of 2022, even as the overall economy contracted in the first quarter.

Last week, the government reported America’s employers added 428,000 jobs in April, leaving the unemployment rate at 3.6%, just above the lowest level in a half-century. Hiring gains have been strikingly consistent in the face of the worst inflation in four decades, with employers adding at least 400,000 jobs for 12 straight months.

Earlier this month, the Bureau of Labor Statistics reported that U.S. employers posted a record 11.5 million job openings in March — an unprecedented two job openings for every person who is unemployed. A record 4.5 million Americans quit their jobs in March — a sign that they are confident they can find better pay or improved working conditions elsewhere.

As hot as the job market is, inflation is even hotter. On Thursday, the government reported that U.S. producer prices soared 11% in April from a year earlier, a hefty gain that indicates high inflation will remain a burden for consumers and businesses in the months ahead.

On Wednesday, the government reported that inflation eased slightly in April after months of relentless increases but remained near a four-decade high. Consumer prices jumped 8.3% last month from a year ago, just below the 8.5% year-overyear surge in March, which was the highest since 1981.

Last week, the Federal Reserve intensified its fight against the worst inflation in 40 years by raising its benchmark short-term interest rate by a half-percentage point — its most aggressive move since 2000 — and signaling further large rate hikes to come. The increase in the Fed’s key rate raised it to a range of 0.75% to 1%, the highest point since the pandemic struck two years ago.

The Commerce Department reported last month that 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, even as consumers and businesses kept spending in a sign of underlying resilience.

Meanwhile, U.S. producer prices soared 11% in April from a year earlier, a hefty gain that indicates high inflation will remain a burden for consumers and businesses in the months ahead.

The Labor Department said Thursday that its producer price index — which measures inflation before it reaches consumers — climbed 0.5% in April from March. That is a slowdown from the previous month, however, when it jumped 1.6%.

The report included some signs that price increases are moderating, but at a painfully high level. The year-overyear increase in April fell from the 11.5% annual gain in March, the first decline in the yearly data since December 2020. And the monthly gain of 0.5% was the smallest in seven months.

Yet prices are still rising at a historically rapid clip. Food costs rose 1.5% just in April from March, while shipping and warehousing prices leapt 3.6%. New car prices rose 0.8%.

The producer price data captures inflation at an earlier stage of production and can sometimes signal where consumer prices are headed. It also feeds into the Federal Reserve’s preferred measure of inflation, the personal consumption expenditures price index.

Thursday’s figures came just a day after the government released consumer price data for April, which showed that inflation leapt 8.3% last month from a year ago. That increase is down slightly from the four-decade high in March of 8.5%. On a monthly basis, inflation rose 0.3% in April from March, the smallest increase in eight months.

Still, there were plenty of signs in the consumer price report that inflation will remain stubbornly high, likely for the rest of this year and into 2023. Rents rose faster as many apartment buildings have lifted monthly payments for new tenants. Prices for airline tickets jumped by the most on records dating to 1963. And food prices continued to rise sharply. crisis has been felt,” said Paul Dales, chief U.K. economist at Capital Economics. “The risk of recession has just risen.”

Growth is slowing as manufacturers and retailers struggle to overcome supply bottlenecks following the COVID-19 pandemic and the war in Ukraine fuels rising food and energy prices. Retail sales figures show British consumers are already reducing spending as economists forecast the U.K. will see the biggest drop in living standards in more than six decades this year.

Thursday’s figures underscore how the U.K.’s recovery from the pandemic has slowed over the past year.