Gross domestic product declined at a 1.4 percent annualized rate over the first quarter of 2022, according to data from the Bureau of Economic Analysis released on Thursday.
Economists had predicted a GDP growth rate of about 1 percent for the first quarter.
The contraction comes after the economy grew by 5.5 percent in 2021, and by 6.9 percent in the final quarter of 2021 alone.
The news comes after the Federal Reserve announced in March that it will raise interest rates over the course of the year. Meanwhile, Deutsche Bank told clients on Tuesday that the U.S. will likely enter a recession.
“We will get a major recession,” Deutsche Bank economists wrote in a report titled “Why the coming recession will be worse than expected.”
The report’s authors said the Fed will have to raise interest rates aggressively in order to bring down inflation to the agency’s goal of 2 percent. The Consumer Price Index rose 8.5 percent in March 2022 compared with the same month last year, the highest increase since the 12-month period ending December 1981.
It is “highly likely that the Fed will have to step on the brakes even more firmly, and a deep recession will be needed to bring inflation to heel,” the report states.
However, the authors also note that their outlook is more pessimistic than those of other economists. Goldman Sachs, for example, has forecast a 35-percent chance of a recession within the next two years.