US Economy Contracts Faster Than Expected in First Quarter
Recent data reveals that the US economy shrank at an annualized rate of -0.5% in the first quarter, worse than the previously reported 0.2% decline. Weak consumer spending was a major factor in this contraction, with spending growing at just 0.5%. The trade deficit and tariff concerns are also impacting economic performance.
The US economy contracted in the beginning of the year due to weaker consumer spending, with GDP declining at an annualized rate of -0.5% from January through March, according to the Commerce Department's final estimate. Consumer spending grew at just 0.5%, the weakest rate in over four years. The decline was attributed to a trade deficit as businesses rushed to stock up on imports ahead of tariffs.
Recent economic data also includes figures on durable goods, unemployment benefits, and mortgage rates, reflecting the impact of policy shifts. Despite the decline in GDP, the market is optimistic about lower tariffs and companies adapting to the new environment.
Unemployment claims rose, indicating a slower job market, while durable goods orders surged. The outlook for business investment is positive, suggesting growth in the second quarter. However, Fed officials remain divided on interest rate cuts, focusing on inflation risks and the labor market rather than GDP revisions.
This is a developing story and will be updated.
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