President Joe Biden is expected to make remarks on the economy during a campaign event in Syracuse, New York, on Thursday, starting at 1:30 p.m. ET. This speech follows a report showing a significant slowdown in the nation’s economy last quarter, with a 1.6% annual pace in the face of high interest rates. The Commerce Department’s report indicated a deceleration in the gross domestic product (GDP) in the January-March quarter, down from a brisk 3.4% growth rate in the previous three months.
A surge in imports, subtracted from the GDP, had a negative impact on growth by nearly 1 percentage point. Additionally, the reduction in businesses’ inventories contributed to the slowing economy. Despite these fluctuations, core components of the economy like household and business investments showed strength during the last quarter. Economists like Paul Ashworth remain optimistic about the positive underlying momentum in the economy.
Price pressures continue to be a concern for the Federal Reserve, with inflation accelerating to a 3.4% annual rate from January through March, representing the biggest increase in a year. Excluding food and energy prices, core inflation rose at a 3.7% rate, up from 2% in the final quarter of 2023. Consumer spending saw a 2.5% annual rate increase in the first quarter, with a notable rise in spending on services like movie tickets and restaurant meals.
However, there was a decrease in spending on goods such as appliances and furniture, with a 0.1% drop – the first decline in this category since the summer of 2022. Despite these fluctuations, there is still positive momentum in key areas of the economy, demonstrating resilience and potential for growth in the coming months.