That would be a sharp drop compared to the 6.9% growth pace in the final quarter of 2021 and would make it the worst three-month stretch since the pandemic recession in the second quarter of 2020.
Economists had forecast that growth would eventually slow from the pace seen during the grand reopening. But even compared to pre-pandemic times, when the US economy grew steadily at a more moderate pace, 1% would be disappointing.
On the one hand, companies rebuilt their inventories in the last three months of last year, which boosted economic activity. But this ran out in the first quarter of 2022, according to economists at Action Economics.
The quarter also began with the Omicron wave of the coronavirus, rising infections and renewed restrictions aimed at containing the virus. While the effects were short-lived, the long-term impact is only now becoming apparent.
Forget the FAANGs. Now it’s a stock picker market
Investors who have been blindly buying Big Tech stock were in for a rude awakening last week after the Netflix implosion. But the good news from Tesla shows that some high-moment stocks can still thrive in this rocky market.
“This environment will create an important backdrop for active investing,” Ken McAtamney, head of William Blair’s global equities team, said in a report.
One of the biggest mistakes an investor can make is assuming that all stocks in a given sector should go up and down at the same time. That is an overly simplistic and binary view of the world.
Instead, investors should do their homework and find companies with strong business models and healthy fundamentals.
“Not all businesses are created equal,” said Paul Moroz, chief investment officer at Mawer Investment Management.
The Nasdaq Big Tech Leaders are a large and diverse group. That’s why investors shouldn’t assume that Netflix’s woes are bad for the rest of the tech sector, or that good news from Tesla gives traders a clear signal to buy every rising stock in sight.
“First-quarter results so far underscore our view that investors need to be selective,” Mark Haefele, chief investment officer at UBS Global Wealth Management, said in a report last week.
Coming up: How will the other Big Tech names fare? This week’s earnings highlights include results from Apple, Amazon, Google, Facebook Meta and Microsoft.
Until next time
Monday: Business climate in Germany; PepsiCo and Whirlpool earnings
Tuesday: US consumer confidence; Earnings from 3M, General Electric, JetBlue, UPS, Warner Bros. Discovery, Alphabet, General Motors, Mondelez, Microsoft and Visa
Wednesday: Earnings from Boeing, Harley-Davidson, Kraft Heinz, Spotify, Ford Motor, Mattel, Meta and PayPal
Thursday: Bank of Japan policy decision; US Q1 GDP; earnings from Caterpillar, Altria, Domino’s Pizza, Mastercard, Twitter, Amazon, Apple, Intel, Roku and Robinhood
Friday: GDP and inflation data for the first quarter of Europe; US personal income and expense data; PCE price index; ExxonMobil and Chevron Earnings