2024-04-25 18:01:33
The US economy grew at its slowest pace in almost two years in the first quarter, as the trade deficit widened due to an increase in imports to meet still-strong consumer spending, but the acceleration of inflation has raised expectations that… Federal Reserve Board (The US Central Bank) will not reduce interest rate Before next September.
The slowdown in growth – announced Thursday by the Commerce Department in a preview of first-quarter gross domestic product – also reflects a slowdown in the pace of inventory accumulation by businesses and a decline in government spending, as domestic demand stay strong.
The Commerce Department’s Bureau of Economic Analysis said gross domestic product grew 1.6% on an annual basis in the first quarter – supported largely by consumer spending – up from 3.4%. During the fourth quarter of 2023.
Economists polled by Reuters had expected gross domestic product to rise 2.4%, with estimates ranging from 1% to 3.1%.
Inflation rose, with the personal consumption expenditure price index – which excludes energy and food – rising 3.7% following rising 2% in the fourth quarter.
The core personal consumption expenditures price index is one of the inflation measures the U.S. central bank tracks to achieve its 2% target.
The central bank has kept the interest rate within a range of 5.25 to 5.50 percent since last July. It had increased the benchmark overnight interest rate by 525 basis points since March 2022.
Consumer spending grew at a still strong pace of 2.5%, a slowdown from the 3.3% growth recorded in the fourth quarter.
US President Joe Biden, who is seeking a second term, welcomed this “continued, steady and stable growth” at the White House and declared in a statement: “But we still have work to do”.
He added: “The costs are too high for working families and I am fighting to reduce them,” accusing his Republican opponents of not having a “plan” in this direction.
The International Monetary Fund recently seemed more optimistic regarding US growth in 2024 than three months ago, and now expects growth of 2.7% compared to 2.1% last January, according to its updated economic forecast published .
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