The U.S. economy hit the brakes in the first quarter of 2024, with growth slowing to 1.3%, lower than expected. This slowdown poses a challenge for President Joe Biden as he seeks re-election. Despite strong consumer spending and job creation, concerns linger over rising inflation.
However, personal income saw an increase, providing a ray of hope. The Federal Reserve has noted signs of increased pessimism and reports on greater downside risks. The high interest rates are impacting growth, although the Fed Chair Powell remains cautious about lowering rates until inflation stabilizes.
Investors and analysts are eagerly awaiting updates from the Federal Reserve on their monetary policy plans. The previously projected rate cuts may not materialize, with expectations now shifting towards one or two cuts by December.
The slump in GDP growth was mainly due to slowdowns in consumer spending, exports, and government spending, partially offset by an increase in residential investment. With uncertainties looming, the U.S. economy faces a challenging path ahead.
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