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POLITICS: US Economic Growth Misses Expectations – Dow Jones Drops

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The US Economy missed growth expectations in data released Thursday.

Experts expected the economy to grow at a 2.2% rate – it only grew at a 1.6% rate.

CNN reported:

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.

The Dow Jones dropped on the news.

CNBC reported:

Stock futures fell sharply Thursday after the latest U.S. economic data showed a sharp slowdown in growth and pointed to persistent inflation.

U.S. gross domestic product expanded 1.6% in the first quarter, the Bureau of Economic Analysis said. Economists polled by Dow Jones forecast GDP growth would come in at 2.4%.

Along with the downbeat growth rate for the quarter, the report showed consumer prices increased at a 3.4% pace, well above the previous quarter’s 1.8% advance. This raised concern over persistent inflation and put into question whether the Federal Reserve will be able to cut rates anytime soon.

“In the short term, the numbers don’t appear to be a green light for either bulls or bears, but if the initial reaction of stock index futures is any indication, the uncertainty is unlikely to ease pressures in a market experiencing its deepest pullback since last year,” said Chris Larkin, managing director of trading and investing at E*Trade from Morgan Stanley.



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