The American economy grew considerably less strongly in the first quarter of this year than in the previous period. The American government reported this in a preliminary estimate. Growth was also less strong than expected.
Growth in the world’s largest economy was 1.6 percent, up from 3.4 percent in the fourth quarter. This is an annualized figure. This means that growth is artificially extended from quarter to quarter as if it remained at that level for a whole year. According to the method used in Europe, growth in the United States would have been 0.4 percent in the first quarter.
On average, economists had predicted a plus of 2.5 percent. Economic growth is important for the interest rate policy of the US Federal Reserve. If the economy cools sharply, the central bank may be more inclined to cut interest rates to stimulate the economy. With strong growth, the Fed can keep interest rates at a high level for longer.
The slowdown in growth is partly related to weaker consumer spending, the engine of the American economy, and also weaker exports. The US government will later release new estimates for growth in the first quarter.
In the financial markets, the Fed is expected to make its first interest rate cut later this year, possibly in September, now that inflation is falling.
