The United States economy grew at a much slower rate than expected by experts during the first quarter of the year, largely due to the slowdown in consumer spending, although it continues to be the driving force compared to other weaker sectors. .
The Gross Domestic Product (GDP) of the United States increased by 1.6% on an annual basis between the months of January and March, the government reported this Thursday. Analysts had forecast an expansion of up to 2.4%, after a pace of 3.4% in the last quarter of 2023 and 4.9% in the previous period.
The strong sustained growth of the US economy has caught investors by surprise in recent weeks, so expectations that the Federal Reserve (Fed) will begin cutting interest rates sooner while the dollar strengthened with the consequent impact on investors around the world.
Consumer spending rose 2.5% in this quarter, below the 3.3% in the fourth quarter of 2023. But this sustained spending and a powerful labor market forge this distrust in the measures of the US central bank. The US, which still does not seem to have enough conviction that inflation will fall to 2%, the goal pursued by the Federal Reserve.
Once the data was known, Wall Street received it with displeasure, with an initial loss of the futures index of 300 points and, meanwhile, the largest rise in ten-year Treasury bonds in five months was recorded.
But this decline in GDP growth does not necessarily mean a concern, analysts said, especially if the Fed’s efforts to cool the economy and thus tame inflation are taken into account.
Furthermore, much of that weakness was due to changes in business inventories and international trade, which often change significantly from one quarter to the next.
Despite these considerations, these same analysts stressed that this decline in forecasts occurs when the Fed’s task against inflation has stalled. Prices rose faster in this first quarter than in the last quarter of 2023. And this raises the possibility that high interests will be a hindrance to economic activity without having completely controlled inflation.
Surveys indicate that citizens do not see the economy in as strong a position as the indicators establish, although they continue to go out and spend. Some talk about citizens defying gravity, but if they land on earth, this can cause problems for the main source of economic growth.
