US GDP growth falls short of initial estimates, but experts say the strong underlying pace of the economy is favorable for Fed decision-making.

In the first quarter of 2024, the US GDP grew by 1.6%, according to the US Bureau of Economic Analysis. However, this growth fell short of initial estimates. With interest rates and inflation remaining high, the GDP print raises questions about the strength of the US economy.

Claudia Sahm, founder of Sahm Consulting, explains how the GDP figures factor into current economic outlooks, especially as the Federal Reserve works to lower inflation rates. Sahm notes that while imports and inventories had an impact on the GDP growth, they are not significant enough to change the overall view of the economy.

Sahm, a former Federal Reserve Board economist known for the Sahm Rule recession indicator, believes that the strong underlying pace of the economy is favorable for the Fed. She suggests that the Fed can rely on a strong economy to guide its decisions moving forward.

Sahm emphasizes that the Fed, led by Chair Jerome Powell, will base its decisions on data, and that there is still a lot of data to consider before making any definitive moves. For more expert insights and market analysis, you can watch the full episode of Morning Brief.[/