With the recent release of the first quality GDP numbers for the year, it has now become a concern the the US economy could be slowing down. First Quarter numbers show that the economy grew at an annualized rate of 1.6%, compared to the 3.4% growth the economy saw in the Forth Quarter of the year prior. While this has been a known condition from the Fed, the concern happens when we include inflationary data. The data suggest that the US economy is moving further and further away from our target inflation rate, which is 2%. Slowing GDP growth rate mixed with increasing inflation rate is a certain economic condition which is feared by investors and the government. Its called stagflation. According to JPMC CEO, Jamie Dimon, global and economic conditions are looking similar to the U.S. economy's last major period of stagflation, which was in the 70's when oil prices rose dramatically. With all the concern, the good news is the the United State's inflation rate and economic growth is in a better position than similar market economies such as the UK and Germany. Our recent GDP growth numbers are also going to be reviewed and finalized twice which way create a better story, as our economic slow down can be less severe than we think or not a concern at all.
Source: https://www.cnn.com/2024/04/25/economy/stagflation-us-economy-gdp/index.html
1 comment:
I am surprised how sticky inflation has been even with the rate spikes by the Fed, this situation may end up differently than the stagflation of the 1970s if inflation does drop by the end of the year and the Fed is able to begin implementing cuts to the interest rate.
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