US Economy Had Even Worse Q1 Performance Than Originally Believed

On Thursday, the Bureau of Economic Analysis (BEA) announced that the American economy grew by less than in the first quarter (Q1) than originally believed.

As the Daily Caller reports, the gross domestic product (GDP) for Q1 was revised down to 1.3% year-over-year from its previous estimation of 1.6%. Economists predicted growth of as much as 2.2% in Q1, following relatively modest growth of 4.9% and 3.4% in the third and fourth quarters of 2023, respectively.

The revision came after new information revealed a decline in consumer spending, federal government spending, and private inventory investment compared to original expectations. At the same time, state and local government spending, exports, and non-residential and residential fixed investments were all higher than first believed. The current-dollar GDP was also lowered, from 4.8% to 4.3%, while real gross domestic income came in at just 1.5%.

The lower-than-expected numbers reflect ongoing concerns about the economy under Joe Biden, particularly a seemingly endless trend of inflation, which remained at 3.4% year-over-year in the month of April. It peaked at 9% in June of 2022, and has since remained higher than 3% every month since Biden took power.

The Federal Reserve has attempted to reduce inflation and restore the economy through several policy decisions, though none have seemed to work. The federal funds rate has been kept to a range of between 5.25% and 5.50%, the highest it has been in 23 years, in an attempt to reduce spending by consumers and businesses alike. As a result, the cost of credit cards has also increased.

Currently, the cumulative debt total held by the nation is $17.69 trillion in Q1; of that amount, $1.12 trillion is on credit cards. The percentage of Americans who have fallen behind on their credit card payments by 90 days or more rose dramatically to 10.7%, surpassing the previous record-high during the Chinese Coronavirus pandemic, which hit 10% in the first quarter of 2021.

In addition to inflation and debt, job growth has remained low in recent months. In April, the U.S. created just 175,000 non-farm jobs, significantly lower than the expected amount of about 242,000. The unemployment rate rose to 3.9%. The one job market that saw substantial growth was government jobs, which gained another 303,000 in March.