HomeFinancial MarketsU.S. Economic Growth Decelerates Over Q1

U.S. Economic Growth Decelerates Over Q1

U.S. economic growth decelerated over the first quarter of 2023, slowing to a rate of 1.1% growth on an annual basis. This comes as higher interest rates curbed the housing market and businesses continued to reduce inventory levels.

Figures from the Commerce Department showed that gross domestic product (GDP) was lower than the 2.6% growth from October through November last year as well as the 3.2% growth from July through September.

On the other hand, consumer spending, which happens to comprise 70% of total U.S. economic output, remained steady at a 3.7% annual pace of growth; the fast quarterly pace in almost two years.

The slowdown stems from the Federal Reserve’s aggressive money-tightening policy as it seeks to fight inflation, which included nine consecutive interest rate hikes over the past year. Even as inflation has been suppressed to a limited extent, it remains well above the Federal Reserve’s 2% target.

According to experts, the Fed’s rate hikes are expected to lead the U.S. into a recession, with the Conference Board, a business research group, putting the probability of a U.S. recession over the next year at 99%.

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