Q1 2024 GDP Slowed to 1.6%

Washington, DC, April 25, 2024-Real gross domestic product (GDP) increased at an annual rate of 1.6% in Q1 2024, according to the advance estimate released by the Bureau of Economic Analysis. In Q4 2023, real GDP increased 3.4%.

"U.S. economic growth slowed in the first part of the year, falling short of economists’ expectations,” reports the Wall Street Journal.

“Gross domestic product expanded at a 1.6% seasonally, an inflation-adjusted annual rate in the first quarter, the Commerce Department said Thursday, a pullback from the previous period.

“Growth in the first quarter lagged behind the 2.4% projected by economists polled by The Wall Street Journal.

“The snapshot comes after a string of federal data in recent weeks suggested that the American economy keeps powering through the highest interest rates in 23 years. 

“So far in 2024, employers around the country have added staff at rates outpacing Wall Street’s projections. An influx of immigrants is boosting growth and tax revenues, economists say, even as it strains some governments’ resources. Credit card companies have recently reported that customers are spending more than they did last year.

“That has translated to optimism for many businesses as earnings season kicked into high gear this week. General Motors upgraded its profit guidance after strong demand for gas-powered trucks and sport-utility vehicles propelled year-over-year growth in first-quarter retail sales. Lockheed Martin said it is cranking out new missiles, air-defense systems and space hardware in part to fill a backlog from wars in Ukraine and the Middle East.

“Some industries have also continued to shell out for data centers, factories and other capital-intensive projects around the country despite higher borrowing costs. Earlier this week, steel producer Nucor said that it would boost such spending this year with investments in mills in West Virginia and North Carolina.  

“‘On a macro level, the U.S. economy appears to demonstrate near-term resilience,’ chief financial officer Steve Laxton told analysts.

“But the continuing growth has also contributed to persistent price pressures that have raised the prospect that inflation might settle closer to 3% than the Federal Reserve’s 2% goal.

“Plateauing inflation in recent months has exacerbated a knotty election-year issue for President Biden despite a promising economic outlook. At the same time, investors’ rate-cut expectations have been upended, slamming the artificial-intelligence-oriented tech stocks that propelled a market rally in recent months.

“There are once again signs, though, that the economy is cooling. Low-income Americans are saving far less than they did prepandemic. Mortgage rates recently bounced back above 7%, leading home sales in March to post their biggest monthly drop in more than a year. Average hourly earnings in March rose at their slowest annual pace since June 2021. 

“Many economists still believe that those cracks will widen-slowing inflation-if and when the labor market loosens.”