US Economy Falls Short of Expectations at 1.6% in the First Quarter

The US economy saw a less-than-expected expansion in the first quarter of 2024, with declines in both exports and consumer spending. This outcome aligns with the forecasts of financial markets, indicating that the Federal Reserve is likely to delay any rate cuts until September.

According to data from the Commerce Department, the world’s largest economy grew by 1.6 percent in the first quarter, slightly below economists’ expectations of 2.4 percent. This represents a slowdown from a 3.4 percent rise in the last three months of 2023.

The Commerce Department said that the slowdown “primarily reflected decelerations in consumer spending, exports, and state and local government spending.” It also noted a “downturn in federal government spending.”

Economists assert that the US economy is outperforming other developed nations. Before the onset of a tightening cycle, consumers took advantage of lower mortgage rates, and corporations seized the opportunity to refinance debt.

Furthermore, businesses are holding onto labor due to difficulties in hiring during and after the COVID-19 pandemic. Consequently, they are experiencing enhanced profit margins due to their robust pricing power.

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