By Cullen McCue – Trending Political News
The latest GDP data has once again ignited recession fears as the U.S: economy appears to be slowing significantly.
The Commerce Department reported Thursday that U.S. gross domestic product in the first quarter rose by just 1.6 percent, coming in well below estimates of 2.4 percent for the first quarter. In total, the latest figure represented a 64 percent miss from the estimate.
The GDP slowdown has once again heightened recession fears, which is defined as consecutive quarters with GDP growth below two percent. GDP growth did come in below two percent twice in 2022, though several economists changed the definition of recession in order to protect Biden and the Democratic Party ahead of the midterm elections.
In addition to the bleak GDP news, inflation also remains high. Personal consumption expenditure inflation for the first three months came in at 3.4 percent, while core PCE, excluding food and fuel, was 3.7 percent, Newsmax reported. These figures were far above the Fed’s target of 2 percent.
“This report was the worst of both worlds: Economic growth is slowing and inflationary pressures are persisting,” Chris Zaccarelli, chief investment officer of Independent Advisor Alliance, told Bloomberg.
“The Fed wants to see inflation start coming down in a persistent manner, but the market wants to see economic growth and corporate profits increasing,” Zaccarelli said
The latest figures could also put an end to the Fed’s hope of issuing rate cuts later this year, a target that has fueled stock market optimism. While initial estimates projected that as many as three rate cuts could be coming in 2024, it is now possible that there could be zero cuts.