First Quarter Economic Growth Revised Up to 1.3% | Economy

The country’s gross domestic product (GDP) grew faster than initially expected in the first quarter, rising at an annualized rate of 1.3%, the Bureau of Economic Analysis reported Thursday.

The revision from previous forecasts of 1.1% follows a 2.6% increase in the fourth quarter, driven by improved inventory spending.

Although the economy is slowing, the labor market remains strong and consumer spending is holding up as Americans shift their spending habits from goods to services.

The Fed said the economy expanded at a “moderate” pace in the first quarter. According to the minutes of the central bank’s May meeting Released Wednesday. But the Fed said inflation remains stubborn, the labor market is tight and stress in the banking sector is leading to credit tightening.

The Fed said it expects “a mild recession to begin in the second half of the year, followed by a gradual recovery thereafter.”

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“Real GDP is expected to slow over the next two quarters, with modest declines expected in both the fourth quarter of this year and the first quarter of next year,” the minutes said.

But dark clouds are looming, including the current standoff in Washington over raising the debt ceiling. Treasury Secretary Janet Yellen has warned that the government will run out of money to pay as early as June 1, and failure to meet its obligations will lead to chaos in the financial system.

Credit rating agency Fitch Ratings late Wednesday put the US government’s AAA debt rating on “negative watch” as a result of political bargaining between the White House and Congress.

“The brinkmanship of the debt ceiling and the failure of U.S. officials to meaningfully address medium-term fiscal challenges that will lead to rising deficits and a growing debt burden pose downside risks to U.S. creditworthiness,” the report said. I am doing,” he said.

However, the London-based firm said it still hopes the government will formally exceed its statutory borrowing power of $31.4 trillion “by the X date the debt ceiling will be resolved”.

House Republicans are scheduled to leave Thursday for Memorial Day leave and return Tuesday. So far, both sides have acknowledged progress in negotiations over the deal, but remain divided on the details of the spending cuts.

Separately on Thursday, the number of Americans filing for unemployment benefits for the first time rose by 4,000 from last week’s revised level of 225,000 to 229,000, the Labor Department said.

The four-week moving average was unchanged at 231,750.

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