WASHINGTON—While new data show the U.S. economy slowed in the first quarter, one CU economist sees some positive signs.
On Friday, the Commerce Department released an advanced estimate showing the U.S. economy experienced decelerated growth of 1.1% during Q1 of this year.
NAFCU Chief Economist and Vice President of Research Curt Long described the growth as “modest,” but said “the underlying signals were strong.”
“The headline figure was a function of two factors—exceptionally strong consumption offset by the largest inventory burn-off since the second quarter of 2021,” Long stated. “The decline in inventory could suggest weaker expectations among retailers, but more likely sets up a rebound in the current quarter as merchants seek to restock. The Federal Reserve will view this as yet more evidence that there is plenty of work still to be done in order to rein in inflation.”
Personal Consumption Numbers
The new data show personal consumption contributed 2.48 percentage points to overall GDP growth, and government spending added 0.81 percentage points; however, these were partially offset by declines in private industry (-2.26 percentage points).
The Personal Consumption Expenditures (PCE) Price Index, the Fed's preferred inflation metric, was 4.2% in the first quarter while core PCE inflation (excluding food and energy) was 4.9%, noted NAFCU in its analysis.
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