US Economy Grows at Slowest Pace in Nearly Two Years, Trade Deficit Widens: Federal Reserve to Keep Interest Rates Unchanged Until September

The US economy grew in the first quarter at the slowest pace in nearly two years as the trade deficit widened as a jump in imports to meet consumer spending remained strong, but with the acceleration of inflation expectations increased that… Federal Reserve Board (U.S. Central Bank) will not reduce interest rates By next September.

The slowdown in growth – announced by the Commerce Ministry in a preview of first quarter gross domestic product on Thursday – also reflects the slow pace of record collection by companies and a decline in government spending, while demand domestic still strong.

The Commerce Department’s Bureau of Economic Analysis said gross domestic product grew an annualized 1.6% in the first quarter – supported largely by consumer spending – compared with 3.4%. In 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 increased, as the personal consumption expenditure price index – which excludes energy and food – rose 3.7% after rising 2% in the fourth quarter.

The Core Personal Consumption Expenditure Price Index is one of the inflation measures that the US Central Bank follows to achieve its 2% target.

The central bank has kept the interest rate between 5.25-5.50% since last July. It had raised the overnight interest rate by 525 basis points from March 2022.

Consumer spending grew at a still strong rate of 2.5%, slowing from the 3.3% growth recorded in the fourth quarter.

US President Joe Biden – who is seeking a second term – in the White House welcomed this “steady and steady growth,” and said in a statement, “But we still have work to do.”

He said, “The costs are too high for working families and I’m fighting to lower them,” accusing his Republican opponents of not having a “plan” for this.

The International Monetary Fund recently looked more optimistic about US growth in 2024 than it did three months ago, and now expects growth of 2.7% compared to 2.1% in January. last year, according to its updated economic forecasts released.