Growth in the U.S. economy slowed notably last quarter, Commerce Department data indicated Thursday, as consumers tightened their belts and companies ran down inventories amid concern about a broad slump in demand over the coming months.
The world's biggest economy expanded by an annualized rate of 1.6%, down from the 3.4% pace recorded over fourth quarter 2023, and well south of Wall Street's 2.5% forecast.
Perhaps more worrying for both government officials and policy makers at the Federal Reserve, however, was the parallel spike in inflation pressures, with the central bank's preferred gauge rising by a faster-than-expected 3.7% over the three month period.
Mike Reynolds, vice president of investment strategy at Glenmede, says President Joe Biden might need to accelerate government spending, "as is typical in years when a sitting president seeks reelection." The idea would be to offset the impact of the Fed's elevated lending rate, which currently sits at a two-decade high of between 5.25% and 5.5%.
