The US economy cooled in the first quarter of 2023, registering a 1.1% growth in the period from January to March, according to the Office of Economic Analysis. This was well below the estimates of the main market surveys, which indicated a 2% rise, and a significant decline from the 2.6% registered in the fourth quarter of 2022.
The slowdown in GDP was mainly driven by a decline in private investment in inventories and a slowdown in non-residential fixed investment. These were partially offset by an acceleration in consumer spending, a rebound in exports, and a smaller decline in residential fixed investment. Despite this, GDP in current dollars rose 5.1% at an annual rate, or $327.9 billion in the first quarter, to a level of $26.4 trillion.
The deceleration of the US economy reflects the ongoing challenges faced by the nation’s businesses and households. Inflation has been on the rise, while the Federal Reserve has been tightening monetary policy at a rapid clip. “The consumer is holding up well despite inflation and a Federal Reserve that has been tightening quite aggressively,” Jan Groen, an economist at TD Securities, told Bloomberg.
The US government and Federal Reserve have taken various measures to stimulate the economy, but these have yet to bear fruit. The economic recovery of the world’s largest economy still remains fragile and uncertain. With the second quarter of 2023 already underway, it remains to be seen how the US economy will fare in the coming months.
However, there are concerns that the US economy could be in for a period of sluggish growth in the coming months. The Biden administration has proposed a $4 trillion infrastructure plan, which could help to boost economic activity, but it remains to be seen if this plan will be approved by Congress.
In the meantime, it’s important that the US government continue to support the economy and households with stimulus measures in order to help maintain the current level of growth. As the US economy continues to recover from the pandemic, it’s essential that the government continue to provide support to ensure that the country’s economic recovery is sustained.