The U.S. economy started the year with its slowest pace of expansion in two years, according to recent data released by the Commerce Department. Despite this slower growth rate, which was lower than the consensus economist estimates, the overall economic outlook remains positive thanks to the efforts of the Federal Reserve to curb inflation.
Real gross domestic product (GDP) increased by 1.6% in the first quarter of this year compared to the fourth quarter of 2023, but this growth rate was below what many had predicted. Despite this slower growth, investors remained optimistic and did not show signs of a recession. However, S&P 500 futures dropped more than 0.7%, and earnings also impacted equity prices after the lower-than-expected GDP growth was announced.
The U.S. economy’s nominal GDP in the first quarter was $28.3 trillion, reinforcing its position as the largest global economy when considering only dollar value of output. On the other hand, real GDP growth is an important indicator that accounts for inflation and currency exchange differences, which makes it surprising given that there were concerns about minimal growth just a year ago when the Federal Reserve raised interest rates to combat inflation. Higher interest rates typically lead to economic downturns by making borrowing more expensive for consumers and businesses.
Overall, despite some concerns about slower economic growth in Q1 2023 compared to expectations, experts believe that the U.S economy’s steady growth will continue throughout the year due to various factors such as government spending and consumer demand.
Investors have been closely watching economic indicators such as GDP growth rates and inflation levels in order to make informed decisions on their investments strategies in 2023
