US Economy Expands by 1.6% in First Quarter, Falling Short of Projections as Inflation Dampens Consumer Spending

The U.S. economy experienced slower growth in the first quarter of 2024 compared to the previous quarter, coming in below economists’ expectations. The Gross Domestic Product (GDP) grew by 1.6% in the first quarter, which was lower than the 3.4% growth seen in the final quarter of 2023.

Key highlights of the Q1 2024 GDP report include a slowdown in growth from the previous quarter and a core Personal Consumption Expenditure (PCE) price index that beat expectations. Real consumer spending growth also fell below forecasted levels, indicating a potential slowdown in economic activity.

Following the release of the GDP data, market reactions were seen in the U.S. dollar index and Treasury yields. The dollar index rose slightly, while Treasury yields increased across the curve, reflecting traders’ expectations for fewer or delayed Fed rate cuts due to higher-than-expected inflation figures. Gold prices also saw a small increase in response to the news.

Premarket trading on Thursday showed futures on major U.S. indices in the red, with a significant drop in tech giant Meta Platforms Inc. following weak revenue guidance for the second quarter. This overshadowed the company’s better-than-expected first quarter results.

Looking ahead, experts warn about the increasing federal debt and rising treasury yields, which could impact mortgage rates and overall economic stability. As the economy continues to navigate through various challenges, it will be important to monitor key indicators and market reactions for potential implications on future growth.