The vaunted recession in the United States does not arrive, but the economy cools. Growth data released today by the Commerce Department’s Bureau of Economic Analysis shows that the US gross domestic product (GDP) grew at an annualized quarterly rate of 1.3% in the first quarter of the year. That equates to a non-annualized quarterly rate of 0.3%.
The data represents an upward revision from the first estimate, of 1.1%, published a few weeks ago. Growth is clearly less than the 2.6% annualized rate with which 2022 ended, equivalent to a quarterly rate of 0.7%, but it represents the third consecutive expansion figure for the economy. Activity contracted in the first two quarters of 2022, but due to extraordinary factors related above all to international trade and changes in inventories, which in principle make it impossible to speak of a recession.
In the first quarter of this year, real GDP growth reflected increases in consumer spending, exports, federal government spending, state and local government spending, and nonresidential fixed investment, which were offset partly due to declines in investment in private inventories and residential fixed investment. Imports, which remain in the GDP calculation, increased, explains the Bureau of Economic Analysis.
Interest rates are holding back, above all, the construction sector, which is very sensitive to the price of money. Other sectors are seeing their activity slow down amid more restrictive financial conditions and inflation that erodes the purchasing power of consumers. The labor market, however, remains very strong, with the unemployment rate at 3.4%, its lowest in more than half a century.
The Federal Reserve expects the US economy to enter a recession at the end of this year, according to the minutes of its last meeting, released this Wednesday, due to the “anticipated further tightening of bank credit conditions, in the midst of financial conditions already restrictive in themselves”, according to the minutes, which go a little further: “A slowdown in real GDP was expected in the following two quarters, before registering a modest decline in both the fourth quarter of this year and the first of next ”, add the minutes.
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