Economic Data Report
Slower Growth, Higher Inflation
- 1.6% Real GDP growth came in lower than expected
- The PCE price index came in higher at 3.4%
- Retail sales continue to be strong
- The Fed will probably hold off on any rate cuts until inflation improves
- Stock market futures sold off on the news
US GDP – Growth Slowing, Inflation Hot
Real GDP for the US came in below expectations at 1.6%, according to the “advance” estimate for the first quarter of 2024. Most forecasts had predicted a better than 2% result. This is the slowest measure of GDP growth in almost two years. Much of the slowdown in growth came from net trade numbers and inventories. Real final sales, which measure domestic demand, continue to grow at better than 3%. The same report from the Bureau of Economic Analysis estimated the Personal Consumption Expenditures (PCE) price index at 3.4%, the highest inflation reading since Q1 of 2023. The “core” PCE index, which excludes food and energy, came in at 3.7%. The PCE index is the Federal Reserve’s preferred measure of inflation. The Fed has a stated target of 2.0% for inflation. Nothing in today’s report would encourage the Fed to cut interest rates any time soon.
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This information is for informational purposes only and does not constitute investment advice.
Sources:
GDP – Bureau of Economic Analysis
Employment & Inflation – Bureau of Labor Statistics
Interest Rates – Federal Reserve
P/E S&P 500 – multpl.com
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