Staff Reports
The economy grew by 1.6% in the first quarter of the year, according to a report from the Bureau of Economic Analysis. This figure is lower than what was expected by economists, who anticipated a growth of 2.5%. The economy’s growth has slowed down compared to the previous quarter, where it expanded by 3.4%. However, overall for 2023, the economy grew by a healthy 2.5%.
GDP grew at 1.6% rate in the first quarter, much less than expected https://t.co/euZVPcK1RW via @dcexaminer
— Sorgatoni (@Sorghaghtani) April 25, 2024
The Federal Reserve raised interest rates to combat high inflation, which typically leads to a slowdown in economic output. Despite this, the positive GDP numbers have given the Fed confidence to keep interest rates at a multi-year high for a longer period. The strong labor market, which added 236,000 jobs in March, also contributes to the Fed’s decision to maintain higher interest rates.
The Fed’s current interest rate target is 5.25% to 5.50%, which has been in place since last July. Previously, investors had expected up to six rate cuts in 2024, but now they are not anticipating a rate cut until possibly September.
These economic indicators show a mixed picture of the economy. While the lower-than-expected GDP growth in the first quarter is a cause for concern, the resilience of the labor market and the Fed’s confidence in maintaining higher interest rates indicate a level of stability and strength in the economy.
