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U.S. Economy Faces Growth Slowdown Amid Inflation Concerns
2024-04-26 15:11:07

U.S. Economy Faces Growth Slowdown Amid Inflation Concerns

The U.S. economy experienced a growth slowdown in the first quarter of 2024, expanding at a 1.6% rate due to higher prices and weaknesses in various sectors, leading to concerns of stagflation. Despite robust consumer spending, underlying indicators suggest a solid economy with limited weaknesses overall.

The Federal Reserve's cautious stance on interest rate decisions amidst rising inflation and stubborn inflation levels above the 2% target further complicates the economic outlook, with expectations for rate cuts shifting towards the end of the year.

Market reactions indicate skepticism towards immediate rate reductions, anticipating a potential delay in easing monetary policy.

Related news on that topic:

Challenges Ahead as US Economic Growth Slows and Inflation Rises

The US economy faced a significant slowdown in the first quarter, growing at a rate below expectations, while inflation surged to 3.7%, surpassing forecasts. This has created challenges for the Federal Reserve, raising doubts about potential interest rate cuts to address the situation. Despite concerns about the economy losing momentum, economists believe that underlying growth remains strong, with cooling demand contributing to easing inflationary pressures. The unexpected rise in inflation has led to market anxieties, impacting Treasury yields and major stock indexes, prompting concerns about the Federal Reserve's strategies to manage inflation amidst economic challenges. Although the labor market shows robust signs, the economic landscape poses uncertainties amid the juxtaposition of slower growth and heightened inflation.

Understanding the Impact of Inflation on US Economic Growth and ... Cut Expectations

The recent headlines highlight a significant slowdown in US economic growth to a nearly two-year low, accompanied by a spike in inflation rates exceeding expectations. This combination raises concerns about stagflation, leading to doubts about potential interest rate cuts by the Federal Reserve. With inflation pressures persisting and growth decelerating, the Fed is cautious about reducing rates, impacting market expectations. The Fed's preferred inflation gauge, the Personal Consumption Expenditures index, has shown a persistent rise, exceeding Wall Street's expectations and dampening hopes for rate cuts this year. As inflation remains above the 2 percent target, the Fed may postpone rate cuts, potentially reassessing future decisions and delaying any cuts until later in the year. Market experts suggest that rate cuts, if any, may not occur until late 2024, affecting investors' bets and stock market dynamics.

Read 14 more recent news on this topic

The press radar on this topic:

New York Times - Business
25. April 2024 um 14:54

U.S. Economy Grew at 1.6% Rate in First Quarter Slowdown

Economy
Finance
The U.S. economy grew at a slower rate of 1.6% in the first quarter of 2024 due to higher prices and weaknesses in other sectors, although consumer spending remained strong. Despite the slowdown, underlying growth indicators show a solid economy with few signs of weakness overall. The Federal Reserve's efforts to cool off the economy amidst rising inflation have not been entirely successful, leading to a cautious approach in interest rate decisions.
The Street
28. April 2024 um 00:46

U.S. growth slowdown, with inflation spike, raises early stagflation risks

Economy
Finance
The U.S. economy experienced a significant growth slowdown in the last quarter, expanding at an annualized rate of 1.6% compared to the previous quarter's 3.4%. This slowdown, coupled with a spike in inflation, has raised concerns of stagflation. As inflation pressures remain elevated and growth decelerates, the Federal Reserve is being cautious about rate cuts, and market expectations for rate reductions have decreased.
The Street
29. April 2024 um 12:46

Thought the Fed would give us an interest-rate break in '24? Think again

Finance
Economy
The Federal Reserve may be reluctant to cut interest rates in 2024 due to signs of resurgence in inflation. The first-quarter Gross Domestic Product report showed slowing economic growth but stronger-than-expected inflation. Investors and traders were expecting rate cuts, but now the betting is maybe two, with the first in November.
New York Times - Business
26. April 2024 um 20:07

The Fed’s Favorite Inflation Index Remained Stubborn in March

Economy
Finance
The Federal Reserve's key inflation gauge showed stubbornness in March, indicating that price increases are lasting longer than expected, potentially delaying interest rate cuts. Market expectations for rate reductions have decreased as inflation remains above the Fed's 2 percent target, prompting policymakers to reassess future rate decisions. Despite solid economic growth, some economists speculate on the possibility of the Fed raising rates again in the future.
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