09:42 AM
The United States Economy grew 1.6% annually in the first quarter of 2024, compared to 3.4% in the fourth quarter of 2023, according to the first estimate of the Department of Commerce.
These results did not meet market expectations. Analysts expected gross domestic product (GDP) growth of 2.2% between January and March, according to the Market Watch consensus.
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In comparison with the last quarter of 2023, The economy expanded just 0.4%.
The slowdown in the pace of growth occurred “mainly due to the decline in consumer spending, exports, and state and local public spending,” explained the Department of Commerce.
Family consumption continues to be the engine of growth in the world’s largest economy. Although households demanded more services such as health care, financial services or insurance, they spent less money on purchasing goods.
There was also a drop in federal government spending, according to the report.
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Consumers, added the Government, They are still willing to spend “although they are more cautious in the face of high prices,” said EY chief economist Gregory Daco.
“Looking ahead, we see the economy cooling gently as moderating labor demand (and) wage increases, persistent inflation and tight credit conditions limit private sector activity,” he added. .
Rate expectations
The growth of the United States economy surprised in 2023, with figures much higher than expected in a context of high interest rates to combat inflation.
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High rates are precisely aimed at making credit more expensive and thus cooling consumption and investment, thus lowering pressures on prices.
Last year, GDP expanded 2.5% compared to 1.9% in 2022, supported by solid consumption.
And for this year, The Federal Reserve raised its projections at its last meeting in mid-March, to 2.1% growth versus the 1.4% it expected before.
The IMF was also more optimistic about US GDP than three months ago, with an expectation of 2.7% expansion compared to 2.1% in January, according to its updated economic forecasts published last week.
A rebound in inflation in the first months of the year makes the market expect that high rates, in a range of 5.25% and 5.50% decided by the Fed, will be maintained at least until September.
The central bank will hold its next monetary policy meeting next week.
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This Friday the inflation data should be known based on the PCE index (Personal Consumption Expenditure Prices), the most followed by the Federal Reserve. key as much as employment data in their interest rate decisions.
