The US economy grew less than expected in the first quarter of 2024, according to the Commerce Department. This economic performance is likely to become a major campaign issue as President Joe Biden seeks re-election in November against his Republican challenger, former President Donald Trump. The data shows that the US registered a GDP growth rate of 1.6% in the first three months of the year, significantly lower than the 2.4% predicted by analysts. This decline follows a 3.4% growth rate in the previous quarter, with reduced consumer spending and exports contributing to the slowdown.
The Commerce Department also noted a decrease in state, federal, and local spending as a factor in the decline in economic growth. Despite a significant drop in the inflation rate, down to 3.5% compared to 9.1% in 2022, prices remain elevated compared to pre-pandemic levels, impacting consumption and global supply chains. The fall in the growth rate is also attributed to a drop in exports, further impacting the overall economic performance of the country.
While the US has experienced slower growth rates, its economic outlook remains ahead of other major industrialized economies. The International Monetary Fund (IMF) predicts a 2.7% growth rate for the US in 2024, up 0.2 percentage points from the previous year. This is more than double the growth expected for the other G7 countries. Despite some positive indicators in Europe, such as increasing consumer confidence in Germany due to wage increases, the country’s government forecasts a growth rate of just 0.3%. Most currencies in the G20 group of major economies have depreciated against the US dollar this year.