Economic growth in the United States slowed down dramatically in the first quarter of 2024, falling even below expectations and indicating that economic struggles are here to stay for the foreseeable future.
As reported by the Daily Caller, the data from the Bureau of Economic Analysis (BEA) released on Thursday confirmed that the U.S. economy’s gross domestic product (GDP) grew at a rate of just 1.6% in the first three months of 2024. This comes after above-trend growth in the third and fourth quarters of 2023, at 4.9% and 3.4%, respectively. Economists had expected that GDP would grow by at least 2.2% in the first quarter of 2024.
The previously high rates for the last two quarters had led some economists to worry about a “no-landing” scenario, where persistent high growth combined with high inflation would lead to an eventual dropoff that would fall below expectations, as was the case with the first quarter of 2024. Meanwhile, prices increased by 3.5% year-over-year in March, much higher than the Federal Reserve’s goal of just 2%; the last time prices grew by less than 3% was May of 2022, which was then followed by a spike of 9% in June of that year.
In an effort to offset record-high inflation, the Fed has set its federal funds rate to a range of between 5.25% and 5.50%, the highest it has been in 23 years, in the hopes that it would restrict economic growth and thus eventually bring inflation down with it. The high federal funds rate has resulted in an increase in the cost of credit across the whole economy, thus discouraging spending and investing.
As it stands now, most experts do not expect the Fed to cut the federal funds rate until September. Nevertheless, the Federal Open Market Committee will soon make an announcement regarding whether or not it will cut rates or keep them the same in the month of May.
Meanwhile, although job growth appears strong on the surface, a deeper analysis reveals that most new jobs created in recent months have been part-time jobs rather than full-time jobs. The number of Americans employed full-time has decreased by over 1.3 million in the last year, from March of 2023 to March of 2024. In the same time period, part-time jobs jumped by 1.9 million.
Polling consistently shows the economy as one of the top two most important issues for voters going into the November election, alongside immigration. In March, a poll from Gallup recorded 30% of voters saying that the economy is their top issue. A recent Associated Press poll saw 60% of respondents say that Joe Biden’s policies have “hurt” Americans financially, with only 40% saying the same about former President Donald Trump. In virtually all polling, President Trump leads Biden on the question of who is better prepared to fix the economy.