U.S. GDP Falls in First Quarter as Surging Imports Knock Down Growth​​​

The U.S. economy retracted slightly in the first quarter as a rush of imported goods and fading fiscal stimulus led to a decline in gross domestic product (GDP), according to data released Thursday by the Bureau of Economic Analysis, The Hill reported. U.S. GDP shrank at an annualized rate of 1.4 percent during the first three months of 2022, according to the bureau’s first estimate of first quarter economic growth. Economists expected U.S. GDP to have fallen by an annualized rate of 1 percent — the first decline in economic growth since 2020. “The first GDP contraction since the recession ended is sure to ignite fears that the economy is stalling out, but on closer inspection, the report isn’t as worrisome as it looks,” wrote Lydia Boussour of Oxford Economics in a Thursday analysis. Consumer and business spending remained strong through the start of the year, a positive sign for the U.S. economy as it faces headwinds from inflation and pandemic-related supply shocks. But that spending helped fuel a surge of imports and a decline in business inventories, both of which detract from GDP. The expiration of pandemic aid programs, declines in government spending and a drop in exports also pushed the economy slightly backward on the whole.

Jobless Claims Fell Last Week Amid Tight Labor Market​​​

New applications for U.S. unemployment benefits fell slightly last week as employers held on to their workers in a tight labor market, the Wall Street Journal reported. Initial jobless claims decreased to 180,000 last week from the previous week’s revised level, the Labor Department said today. Jobless claims have remained near historic lows since late 2021. The four-week average for claims, which smooths out volatility, inched higher to 179,750 from the previous week’s revised 177,500. The four-week average reached its lowest point ever this month, at 170,500. Continuing claims, a proxy for the total number of people receiving payments from state unemployment programs, declined to 1.4 million for the week ended April 16 from the previous week’s level. Continuing claims are reported with a one-week lag. (Subscription required.)

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Not able to make it to D.C. for the #ABISpringMeeting? A limited number of live sessions and networking tomorrow will be available via a state-of-the-art virtual portal. Select the "Virtual Program" option in the agenda and register today!

Commentary: The Biden Student Debt Question: Will He or Won’t He?​​​

The letter-writing campaign — #PensForBiden — is the latest attempt to sway Mr. Biden on a high-stakes dilemma as the midterm elections approach and much of his domestic agenda remains stalled: How to handle the $1.6 trillion that more than 45 million people owe the government, according to a New York Times commentary. So far, Mr. Biden has extended the pandemic pause on student loan payments four times, most recently until Aug. 31. Payments have now been on hold for more than two years, over two presidential administrations. But all that time poses problems, according to the commentary. Many of the issues that have long bedeviled the loan system have only grown more complicated during the pause, and receiving bills again will infuriate and frustrate millions of people who feel trapped by a broken system and crushing debt. Now some advocates believe Mr. Biden will have little choice but to do something that has divided his advisers: Wipe out thousands of dollars in debt per borrower with the stroke of a pen. Perhaps the most concrete signal came this week: Representatives Tony Cárdenas and Nanette Diaz Barragán, two California Democrats, said that Mr. Biden had discussed loan relief during a meeting with the Congressional Hispanic Caucus on Monday. The lawmakers said that Mr. Biden had indicated that he was looking to provide some form of debt relief and was exploring his legal options.

Hedge Funds Attract Largest Sum of Investor Inflows Since 2015​​​

Allocators have renewed their interest in hedge funds after the industry fell out of favor in recent years. Institutional investors funneled $19.8 billion in new capital to hedge funds during the first quarter, the largest sum since 2015, according to data from Hedge Fund Research (HFR), YahooFinance.com reported. The sharp rise in inflows came as asset owners looked to capitalize on a period of extreme market volatility, driven by Russia’s invasion of Ukraine, global inflationary pressures, and expectations for Federal Reserve interest rate hikes. The investment rush also occurred during a quarter of strong performance for hedge funds. HFR’s HFRI 500 Index, a composite index of the largest 500 funds that report to the firm’s database, gained 0.3% in Q1, faring better than the tech-heavy Nasdaq and the S&P 500, which each recorded their worst quarterly performances in two years in the three months ending March 31. In 2021, hedge funds substantially trailed the S&P 500’s 26.9% return, gaining only 10.2% for the year. Macro strategies, which attempt to profit from broad market swings related to large-scale economic and political events, led the increase in investor allocations on strong performance-based gains. This category of hedge funds lured in $40 billion of new capital in the first quarter to $677.8 billion in total assets under management.

CFPB's Chopra to Revisit Rules Around Credit Card Fees, Abuses​​​

The Consumer Financial Protection Bureau (CFPB) will revisit its rules around credit card fees in a bid to stamp out abuses, discourage excessive late fees and boost competition, the agency's director told Congress on Wednesday, Reuters reported. "I am asking the staff to look at whether we should reopen the CARD Act rules ... to determine whether there needs to be any changes," said CFPB Director Rohit Chopra. "We want to make sure ... that credit cards are a competitive market that people can use to find lower rates," he added, highlighting the need to specifically address late fees. Chopra was responding to a lawmaker's question about the Credit Card Accountability Responsibility and Disclosure Act, a measure enacted in 2009 to curb abuses following the global financial crisis. His statement to members of the House Financial Services Committee comes after Reuters reported this month that the agency would ramp up enforcement actions against lenders that illegally charge credit card late-payment fees and may rewrite its rules that set thresholds for such fees. The development also marks an escalation of a broader crackdown by the CFPB on what it calls "junk fees," a catch-all for overdraft, credit card late-payment fees, bounced-check fees, and other charges.

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