Compared to the fourth quarter of 2023, the slowdown in the outset of 2024 is mainly explained by lower dynamism in consumer spending, exports, and state and local governments' expenditure. Also, federal government spending fell, while imports rose.
According to a revised estimate just published by the Office of Economic Analysis of the Department of Commerce, the gross domestic product (GDP) of the United States expanded by 0.3% quarterly in January-March 2024, half a point less than the 0.8% growth posted in the fourth quarter of 2023.
In year on year terms, US GDP rose by 1.3% in the first quarter, compared to 3.4% in October-December.
The downwards revision of three tenths with respect to the preliminary data was motivated by a review of consumer spending data.
Year on year growth in January-March reflects increases in consumer outlays, nonresidential and residential fixed investment, and state and local government spending.
On the other hand, imports grew --subtracting from GDP growth-- and investments in private inventories fell.
Compared to the fourth quarter of 2023, the slowdown in GDP at the beginning of the year is mainly explained by the lower dynamism in consumer spending, exports and the spending of state and local administrations. Additionally, federal government spending fell and imports rose.
These movements were partially offset by the acceleration of residential fixed investment
MACRO SCENARIO
The United States consumer price index (CPI) stood at 3.4% year-on-year in April, one tenth less than in March, while core inflation closed went to 3.6%, two tenths less than in March.
For its part, the US economy generated 175,000 new jobs in April, a figure much lower than the 315,000 created in March, while the unemployment rate rose one tenth, to 3.9%.
Despite the cooling of the US labor market, it has been creating jobs for 40 consecutive months. Hiring expanded mainly in the health, social assistance, transportation and warehousing sectors, while it showed little change in the areas of mining, oil and gas extraction, manufacturing, wholesale trade, the information and financial sector, activities professionals or in leisure and tourism.
MONETARY POLICY
At its meeting in early May, the Federal Reserve (Fed) decided to keep interest rates in the range of 5.25% to 5.5%, the highest since January 2001.
In this context, the institution kept its monetary policy unchanged for the sixth consecutive meeting after the last increase of 25 basis points carried out in July 2023 and the pause that began in September.
The Fed warned that it does not deem it appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably towards 2%. In this sense, the Fed highlighted that recent indicators suggested that economic activity has continued to expand at a good pace and that employment growth remained strong and the unemployment rate low, while inflation, despite having decreased during the last year, was still high.
"In recent months, there has been a lack of greater progress towards the 2% inflation target" a Fed statement indicates, while pointing out that the risks to achieve the double goal of employment and inflation had moved towards a better balance during last year, although the economic outlook was uncertain.
