US economy grew by just 1.6% in the first quarter, a much slower pace than expected | CNN Business
US economy grew by just 1.6% in the first quarter, a much slower pace than expected CNN
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US Economy Cools in First Quarter, but Remains Healthy
The US economy cooled more than expected in the first quarter of the year, but remained healthy by historical standards. Economic growth has slowed steadily over the past 12 months, which bodes well for lower interest rates, but the Federal Reserve has made it clear it’s in no rush to cut rates.
Gross domestic product, which measures all the services and goods produced in the economy, measured an annualized rate of 1.6% in the first quarter, the Commerce Department reported Thursday. It was the weakest pace of growth since the second quarter of 2022 when the economy contracted.
That’s a steep slowdown from the fourth quarter’s 3.4% rate and also below the 2.2% rate economists projected, according to a FactSet poll. The figures are adjusted for seasonal swings and inflation.
A sharp increase in imports, which subtracts from GDP, contributed to the slowdown in growth from the fourth quarter, shaving off nearly an entire percentage point. Spending on imports jumped to a 7.2% rate from 2.2% in the fourth quarter.
A decrease in inventory investment in the private sector also weighed on the economy earlier this year. There was also a sharp slowdown in government spending.
Consumer spending, which accounts for the lion’s share of economic output, also slowed earlier this year, but it still fueled growth in the first quarter. A key gauge of demand in the economy — final sales to private domestic purchasers — remained strong in the January-through-March period, slowing only slightly from the fourth quarter.
The Dow tumbled by 500 points at the opening bell, the S&P 500 fell 1.3% and the Nasdaq Composite declined by 2%.
What this means for interest rates
Inflation slowed considerably last year, but the pace of its descent has stalled in recent months. That’s the main reason why the Fed isn’t planning to cut interest rates imminently, but the economy’s resilience is also reassuring central bankers that they can afford to sit still and wait for inflation to budge lower. Fed officials will begin to cut rates once they’re convinced that inflation is under control and is on track to their 2% target — but they could also reduce rates sooner than expected if the economy suddenly falters.
For now, economic growth remains healthy, despite the weaker-than-expected first-quarter GDP reading, as employers continue to hire at a solid clip and workers still command robust wage gains. Economists and Fed policymakers are still widely expecting that momentum to slow even further this year, with interest rates perched at a two-decade high, but a recession this year isn’t in the cards.
“Consumers are becoming a bit more selective with what they purchase and how much of it because of the high interest-rate environment and because inflation remains high,” Oren Klachkin, financial market economist at Nationwide, told CNN. “But as long as the job market remains solid, they will continue to spend. That is more than compensating for the fact that there’s continued pressure from the inflation front and interest rates.”
The latest GDP reading dealt some damage
SDGs, Targets, and Indicators
-
SDG 8: Decent Work and Economic Growth
- Target 8.1: Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7% GDP growth per annum in the least developed countries
- Indicator: Gross domestic product (GDP) growth rate
-
SDG 12: Responsible Consumption and Production
- Target 12.2: By 2030, achieve the sustainable management and efficient use of natural resources
- Indicator: Spending on imports as a percentage of GDP
-
SDG 2: Zero Hunger
- Target 2.1: By 2030, end hunger and ensure access by all people, in particular the poor and people in vulnerable situations, including infants, to safe, nutritious and sufficient food all year round
- Indicator: Consumer spending on goods
| SDGs | Targets | Indicators |
|---|---|---|
| SDG 8: Decent Work and Economic Growth | Target 8.1: Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7% GDP growth per annum in the least developed countries | Gross domestic product (GDP) growth rate |
| SDG 12: Responsible Consumption and Production | Target 12.2: By 2030, achieve the sustainable management and efficient use of natural resources | Spending on imports as a percentage of GDP |
| SDG 2: Zero Hunger | Target 2.1: By 2030, end hunger and ensure access by all people, in particular the poor and people in vulnerable situations, including infants, to safe, nutritious and sufficient food all year round | Consumer spending on goods |
Analysis
1. Which SDGs are addressed or connected to the issues highlighted in the article?
The issues highlighted in the article are connected to SDG 8 (Decent Work and Economic Growth), SDG 12 (Responsible Consumption and Production), and SDG 2 (Zero Hunger).
2. What specific targets under those SDGs can be identified based on the article’s content?
Based on the article’s content, the specific targets that can be identified are:
– Target 8.1: Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7% GDP growth per annum in the least developed countries.
– Target 12.2: By 2030, achieve the sustainable management and efficient use of natural resources.
– Target 2.1: By 2030, end hunger and ensure access by all people, in particular the poor and people in vulnerable situations, including infants, to safe, nutritious and sufficient food all year round.
3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?
Yes, there are indicators mentioned or implied in the article that can be used to measure progress towards the identified targets. The indicators are:
– Gross domestic product (GDP) growth rate: This indicator can measure progress towards Target 8.1 (Sustain per capita economic growth).
– Spending on imports as a percentage of GDP: This indicator can measure progress towards Target 12.2 (Sustainable management and efficient use of natural resources).
– Consumer spending on goods: This indicator can measure progress towards Target 2.1 (Ending hunger and ensuring access to safe, nutritious food).
The article mentions the GDP growth rate, spending on imports, and consumer spending as factors contributing to the economic situation discussed.
4. Create a table with three columns titled ‘SDGs, Targets and Indicators’ to present the findings from analyzing the article.
| SDGs | Targets | Indicators |
|---|---|---|
| SDG 8: Decent Work and Economic Growth | Target 8.1: Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7% GDP growth per annum in the least developed countries | Gross domestic product (GDP) growth rate |
| SDG 12: Responsible Consumption and Production | Target 12.2: By 2030, achieve the sustainable management and efficient use of natural resources | Spending on imports as a percentage of GDP |
| SDG 2: Zero Hunger | Target 2.1: By 2030, end hunger and ensure access by all people, in particular the poor and people in vulnerable situations, including infants, to safe, nutritious and sufficient food all year round | Consumer spending on goods |
Behold! This splendid article springs forth from the wellspring of knowledge, shaped by a wondrous proprietary AI technology that delved into a vast ocean of data, illuminating the path towards the Sustainable Development Goals. Remember that all rights are reserved by SDG Investors LLC, empowering us to champion progress together.
Source: cnn.com
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