US Inflation Surges as GDP Growth Slows to 1.6% in Q1, Below Expectations

By Thea Felicity

Apr 25, 2024 02:20 PM EDT

FED Foresees US Economy Expansion Among World Regions
FED has claimed that US economy is still at its highest life as it expands towards regions.
(Photo : Spencer Platt / Staff)

The US economy faced unexpected challenges as GDP growth slowed in the first quarter, which is below projections, with consumer spending also falling short, per CNBC.

Despite hopes for a stronger recovery, the Commerce Department's data revealed a 1.6% annualized increase in GDP, below economists' forecast of 2.4%, prompting concerns about inflationary pressures. 

Meanwhile, the personal consumption expenditures price index rose at a 3.4% annualized pace, its largest gain in a year, amplifying worries about rising prices and potential impacts on monetary policy. 

Markets responded with a sharp downturn, with futures tied to the Dow Jones Industrial Average dropping over 400 points, reflecting investor unease about the economy's trajectory and the Federal Reserve's response. 

Regardless, analysts anticipate further economic deceleration in subsequent quarters, with inflation remaining a key concern despite hopes for moderation throughout the year.

READ NEXT: China to Remain the World's Top Engine for Global Economic Growth, ADB Says

What Slow GDP Growth Means For The US Economy

As reported, slowing GDP growth and rising inflation suggest that the economy is facing challenges, including potential constraints on consumer spending and investment. 

However, this could mean the Federal Reserve making new changes to address inflationary pressures, potentially affecting interest rates and market dynamics. The data above also suggests that economic recovery may be slower than anticipated, with implications for businesses, consumers, and policymakers alike.

Earlier this month, VCPost reported that inflation is already felt not just by businesses but also by consumers, which is worsening credit card debt in this economy. 

READ MORE: More US Voters Trust Donald Trump Than Joe Biden to Deal With Inflation and Cost of Living, New Poll Shows

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