Reuters - U.S. economic growth slowed more than expected in the first quarter, but a surprisingly hot quarterly Personal Consumption Expenditure inflation component suggested that the Federal Reserve would not cut interest rates before September.
Gross domestic product increased at a 1.6% annualized rate last quarter, the Commerce Department said in its advance estimate on Thursday.
Economists polled by Reuters had forecast GDP rising at a 2.4% rate after growing at a 3.4% rate in the fourth quarter. The economy has defied prophecies of doom since late 2022 following the Fed's aggressive rate hiking campaign to stamp out inflation.
This was also a clear slowdown from the 3.4 percent increase seen in the final three months of last year.
While the latest figure still shows expansion, economic pressures could weigh on President Joe Biden as he seeks reelection in November.
Biden has been working to improve perceptions surrounding his handling of the economy even as soaring inflation has eased since the Covid-19 pandemic and the jobs market remained solid.
On Thursday, the slowing in growth "primarily reflected decelerations in consumer spending, exports, and state and local government spending," said the Commerce Department.
There was also a "downturn in federal government spending," the report said.
Consumption has been more resilient than anticipated last year, even as economists predicted that spending would cool as households depleted their savings from the pandemic period and while borrowing costs stayed high.
A key factor has been a robust labor market, fueling job and wage gains.
Sumber : Reuters
powered by: IPOTNEWS.COM
