GDP Report Shows Economic Growth Slowed in First Quarter - WSJ
S E E D E D C O N T E N T
Some consumers say they are reducing their spending because of rising prices. Photo: Angus Mordant/Bloomberg News
U.S. economic growth decelerated to a 1.1% annual rate in the first quarter as consumers faced high inflation, rising interest rates and the onset of banking problems.
The rise in U.S. gross domestic product in the first three months of the year marked a slowdown from inflation- and seasonally adjusted 2.6% growth in the fourth quarter, the Commerce Department said Thursday.
Gross domestic product is a measure of the value of all the goods and services produced in the country, with bell peppers grown in Florida, concerts in Nebraska and helicopters built in Connecticut all contributing.
The U.S. economy grew at around 2.2% a year in the 10 years before the pandemic.
Solid consumer spending drove the first-quarter increase, the department said, while a slowdown in business investment and a decline in housing investment offset growth.
Consumer spending, the primary driver of growth, and hiring were surprisingly strong at the start of the year, but more recently slowed as the Federal Reserve continued raising interest rates to cool the economy and curb rapid price increases.
Consumers cut retail spending in February and March. Home sales and manufacturing output dropped last month, and robust hiring growth eased gradually.
The latest update on the U.S. economy gives Fed officials and investors a broad view on the extent to which higher interest rates are working as intended.
Many economists expect the economy to cool even more as the year progresses, with the possibility of a U.S. recession later this year. Analysts are watching to see whether recent banking stress following the failure of two midsize banks leads to tighter lending conditions for businesses and households that weigh on the economy.
“The consumer is holding up well despite inflation and a Fed that has been tightening its stance pretty aggressively,” said Jan Groen, an economist at TD Securities. “The tighter credit supply will start to bite.”
A still-solid labor market, higher wages and built-up savings have helped extend the ability of households to continue spending more despite high inflation. Overall household spending, which includes services, rose modestly in February, the Commerce Department said last month. March household-spending figures will be released on Friday.
Erik Lundh, principal economist at the Conference Board, said consumers still have extra money to work through. “There does appear to be some gas left in that tank,” he said.
Still, some consumers say they are reducing spending because of rising prices.
Jim Cox, a retired piano tuner in Xenia, Ohio, said prices for groceries, model-train parts and cars have all gone up. Mr. Cox said he delayed a vehicle trade-in after getting a lease quote from an auto dealership that was more than double his current monthly rate of around $400 a month.
“We don’t know what we’ll do. We may have to go get a used car,” he said.
Brian Bethune, an economics professor at Boston College, said smaller companies are likely to be hurt by a pullback in bank lending, as they don’t have easy access to other forms of capital, such as bonds. Companies of all sizes use financing of different types and lengths to pay for expansions or even inventories while they wait for sales.
“The small businesses are pretty exposed. They are typically borrowing from the bank,” he said. “They don’t have the luxury of issuing long-term debt.”
Caliber Metals Inc. makes metal drip-edges, a product used on residential roofs, at its factory in New Baltimore, Mich. President Bill Harber Jr. expects sales this year to be about 5% below record 2022 results, if interest rates continue to increase and new-home builders pull back.
“We are expecting a busy spring,” he said. “We don’t know how long that is going to last if the Fed keeps hiking interest rates.”
Those were once the growth numbers of Socialist Europe. Welcome to the era of the left.
Leave it to the right wing to complain about a growing economy.
The Fed raised rates to put the brakes on inflation, which slowed growth. But, do you know what three consecutive quarters of economic growth is?
It is NOT A RECESSION!
The recession the gop was really hoping for...
A recession the gop prayed America suffered!
The Joe Biden recession that never happened!
Maybe you are worse off now, but most Americans are not. But then, most Americans do not live and work in a godforsaken suburb of Waco Texas...
A lot of this so called growth is the post Covid bounce back. Job numbers remain good and demand is still strong. But will it last?
Leave it to the left wing to deny the reality of a slowing economy; higher gas prices; high inflation; and consumer confidence waning.
I am sure the coming recession will fix everything./S
You will be disappointed then because America is not going to suffer a recession?
After Covid and Putin's War in Ukraine caused havoc, business is now booming.
Inflation is waning, employment is booming, American businesses are making profits.
Whaa!
Most are better off, especially the rich...
Why will the gop not share that wealth?
No, MAGA are the poor and uneducated...
Trumpism is based on their resentments!
In 2016, Trump won 206 counties that Obama won, Iowa, Illinois, Michigan, Minnesota, New York and Ohio had the most of these pivot counties. In 2008, they were good blue collar workers, now they are resentful racists.
Despite all evidence to the contrary.
Which is the reason major corporations are laying off thousands and wages are starting to stagnate again (despite inflation still rising). Booming businesses are looking to hire people- not lay them off. Also, in case you missed it- Covid and the War in Ukraine (don't know how you could miss that will all of the billions in economic and military aid Brandon and Congress are sending Ukraine. Devaluing the dollar even further.) are still around.
And banks are going bankrupt! Which always happens in a booming economy./S
So what is it like in leftist world? Is Brandon single handedly defeating Russia and Putin with nothing more than a metal chain? Is Lai Thomas winning every women's swimming event in the Olympics and becoming a world icon? Is Trump clan finally in prison? Have Obama, Bill, and Hillary been sainted? Has the Republican Party been eradicated? Just curious because reality isn't even close to what you are portraying.
And in 2020 they'd learned the truth about Trump and voted for Biden overwhelmingly.
Still waiting for that recession. Was supposed to happen like 2 years ago, and has been right around the corner every other day, but nothing. Businesses are still hiring, construction is continuing unabated.
Tech, and that is basically it. Everyone is hiring. Stagnant wages are the result of a culture of favoring management over labor.
Like 2 did. 1 was a bank that had a very specific customer list, and the other was a regional bank.
Fine.
IDK who brandon is, but Russia has found itself in a quagmire and is burning through men and equipment on a level not seen since WW2 and has no chance of "winning" with the west backing Ukraine.
Fuck that.
Lol Trump may be.
No? Were they supposed to be?
No, but they are working on it.
Leave it to the left to ignore stifling inflation and high costs across the board.
And yet... things just keep chugging along.
“Chugging” is so 20th Century.
Oh yeah, chugging right along ....
and another one gone, and another one gone
another bank bites the dust
hey, it’s gonna get you too
First Republic Bank bites the dust .....