Washington, Jun 30 (IANS): The US economy shrank at an annual rate of 1.6 per cent in the first quarter in the third and final estimate, the Commerce Department reported.

In the advance estimate released in late April, the decline in real GDP was 1.4 per cent. In the second estimate last month, that was revised to a decrease of 1.5 per cent, reports Xinhua news agency.

The GDP data for the first quarter marks the US economy's first contraction since the onset of the Covid-19 pandemic.

The decrease in real GDP reflected decreases in exports, federal government spending, private inventory investment, and state and local government spending, while imports, which are a subtraction in the calculation of GDP, increased.

Non-residential fixed investment, personal consumption expenditures (PCE), and residential fixed investment increased, according to the report.

"In the first quarter, an increase in Covid-19 cases related to the Omicron variant resulted in continued restrictions and disruptions in the operations of establishments in some parts of the country," the Department's Bureau of Economic Analysis (BEA) said in the report.

The BEA noted that government assistance payments in the form of forgivable loans to businesses, grants to state and local governments, and social benefits to households "all decreased as provisions of several federal programs expired or tapered off".

With inflation at four-decade high, more and more economists believe that the Federal Reserve's more hawkish stance could plunge the US economy into a recession.

Even Fed Chair Jerome Powell recently said that recession is "certainly a possibility" though "it's not our intended outcome at all".