The US economy recorded a slower-than-expected growth in the first quarter of this year, despite an increase in consumer spending, at a time when a separate report from the Labor Department showed, today, Thursday, that the number of new applications for government unemployment benefits decreased by 16. alpha.
Sharjah 24 – Reuters:
US economic growth slowed more than expected in the first quarter, despite an increase in consumer spending.
According to estimates by the US Department of Commerce, the preliminary reading indicates that GDP grew by 1.1% on an annual basis in the first quarter of this year.
The economy grew by 2.6% in the fourth quarter of last year.
Economists had expected GDP growth of 2% in the first quarter.
Despite the slowdown, the Federal Reserve is on track to raise interest rates again by 25 basis points next week.
The Council raised interest rates by 475 basis points since last March, from a level close to zero to the current range between 4.75 and 5%.
Credit conditions have tightened, following the latest financial market turmoil, which together with the fastest series of interest rate hikes since the 1980s, raised deflationary risks by the second half of the year.
However, consumer spending grew at a faster rate in the January-March period than at a slow pace of 1% in the fourth quarter.
Consumer spending accounts for more than two-thirds of US economic activity.
A separate report from the Labor Department on Thursday showed that the number of new applications for state unemployment benefits fell by 16,000 to a seasonally adjusted level of 230,000 for the week ending April 22.
Economists had expected 248,000 applications in the last week.
Although applications, which have risen since last March, are still well below levels that could raise concerns about the labor market, the tightening of credit conditions for businesses and households is hurting demand and ultimately employment.
2023-04-27 19:33:05
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