US GDP registers a sharp slowdown

US economy
  • The country’s Gross Domestic Product in the first quarter grew just 1.1%, much less than the 2% expected by economists.
  • In addition, there was also a large decrease from last quarter, where the increase in GDP was 2.6%.
  • The report released today also revealed that the personal consumption expenditures price index rose 4.2%, above the estimated 3.7%.

The US economy grew in the first three months of the year, but not as expected by the experts. It is that the Gross Domestic Product barely jumped 1.1% in the first quarter of 2023 when economists projected an increase of 2%.

Analysts blamed this event on the rise in interest rates and inflation which is still high. However, the document indicates that this slowdown was due to the decrease in private investment in inventories and a slowdown in non-residential fixed investment.

It is worth remembering that GDP also showed a huge slowdown compared to the last quarter of last year, where growth had been 2.6% for the country.

On the other hand, the Personal Consumption Expenditures Price Index, an inflation factor the Federal Reserve considers important, jumped 4.2%, ahead of the 3.7% estimate.

Still, stocks are in the green ahead of the market open, with the Nasdaq up 1%, the S&P 500 up 0.4% and the Dow Jones up 0.4%.

In parallel, at the end of the first quarter, the US economy was affected by a crisis in the banking sector. Some experts hope that this problem plus the Fed’s end of rate hikes will lead to a soft landing and avoid a strong recession.

It should also be noted that consumers have remained resilient as has the labor market, with an unemployment rate of 3.5%, something that could support growth in the next quarters of 2023.