US Economy: Steady Consumer Spending Boosts GDP Growth Amid Uncertainty over Stagflation

Economic activity in the US may stabilize after two consecutive quarters of slower growth, according to preliminary estimates. The median nowcast compiled by CapitalSpectator.com suggests that output could be on track to normalize after the volatility seen post-pandemic. While there is still uncertainty surrounding second-quarter economic activity due to the lack of hard data for April and the unpredictability of May and June, some analysts are warning of the rising risk of stagflation in the US, where inflation remains high while economic growth slows.

Despite differing opinions on the outlook for the US economy, a median estimate of 1.9% GDP growth for Q2 provides a baseline for monitoring economic activity in the upcoming weeks. Steady consumer spending continues to be a driving force behind the economy, with services spending showing positive growth. While some early Q2 data suggests a loss of momentum, the overall outlook remains cautiously optimistic as economic activity evolves throughout the quarter.

Federal Reserve Chairman Jerome Powell dismissed this risk earlier in the week, emphasizing that he does not foresee stagflation occurring. However, some analysts are warning that if inflation continues to rise while economic growth slows, it could lead to higher prices and reduced purchasing power for consumers.

In conclusion, while there is still uncertainty surrounding second-quarter economic activity in the US, steady consumer spending continues to be a driving force behind the economy. If inflation continues to rise while economic growth slows, it could lead to higher prices and reduced purchasing power for consumers. Despite differing opinions on the outlook for the US economy, a median estimate of 1.9% GDP growth for Q2 provides a baseline for monitoring economic activity in the upcoming weeks.