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US Economy: Slower Growth With Stronger Inflation

ByFxPro Financial Services Ltd
AuthorAlexander Kuptsikevich
Published 04/25/2024, 10:45 AM

The dollar strengthened, and stocks fell after statistical data from the US. The focus was on the preliminary estimate of GDP for the first quarter. Annualised quarterly growth came in at just 1.6%, down from the 2.5% and 3.4% previously forecast. Disappointment increased given that exceeding forecasts has become the norm. GDP growth for the same quarter a year earlier fell to 3.0% from 3.1%.

GDP growth to the same quarter previous year

In contrast, the price index showed a 3.1% increase from 1.6% previously. Thus, the U.S. economy simultaneously faced increased inflationary pressures and slowing growth. This has caused even more concerns among those who fear stagflation.

At the same time, a new batch of very positive weekly unemployment data was released. Initial jobless claims fell to 207K, the lowest since February. The number of repeat claims fell to 1781K - the lowest in three months.

It is worth noting that these are very low figures by historical standards. The tense situation in the labour market will create domestic inflationary pressures even if commodity prices start to decline.

US Unemployment claims

The FxPro Analyst Team

Latest comments

Maybe the numbers are manipulated?
Better yet and I'm investing in cryptocurrency lol
Do you believe Fed could cut rates despite inflation if the dollar continues to strengthen?
Whether the Federal Reserve will cut interest rates in the presence of inflation depends on many factors, including economic conditions, the level of inflation, employment, and monetary policy objectives. Typically, when the level of inflation rises, the central bank may consider raising interest rates to curb inflationary pressures rather than cutting them. However, the Fed may make decisions based on overall economic conditions and inflation expectations. If the U.S. economy faces slower growth or other unfavorable factors, the Fed may pause interest rate hikes or even cut interest rates even if inflation rises in order to support the recovery or avoid an excessive slowdown. In addition, a stronger U.S. dollar may also have an impact on exports and international competitiveness, which may be of concern to the Federal Reserve. Thus, a stronger dollar may affect the Fed's monetary policy decisions, but it is usually not the only factor, and other economic indicators and factors are also taken into account. Come on and I'm investing in cryptocurrencies to make the right choice
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