The U.S. economy is losing steam in the middle of an election year. After strong growth that exceeded all expectations in 2023, the world’s leading economy cooled in the first quarter of this year. The slowdown was somewhat greater than anticipated in the first estimate, and gross domestic product (GDP) grew at an annual rate of 1.3% in the first quarter, 0.3% lower than initially expected, according to data released Thursday by the Commerce Department’s Bureau of Economic Analysis.
Economists had expected that the 1.6% growth rate forecast in the preliminary first-quarter estimate would be revised downward. It represents a slowdown from the 3.4% annual rate in the fourth quarter of 2023. The figure has yet to be revised a second time.
“The increase in real GDP primarily reflected increases in consumer spending, residential fixed investment, nonresidential fixed investment, and state and local government spending that were partly offset by a decrease in private inventory investment. Imports, which are a subtraction in the calculation of GDP, increased,” the Bureau of Economic Analysis explained.
The downgrade is bad news for U.S. President Joe Biden, who is seeking re-election in the November presidential election. With inflation still not budging, Biden is trying to counter the concern over consumer prices by pointing to job creation and GDP growth. Even so, the fact that part of the slowdown is due to private inventory investment and the foreign sector relativizes…
