Economic challenges in the U.S.: GDP grows less than expected in the first quarter

The Gross Domestic Product (GDP) of the United States had a lower-than-expected growth in the first quarter of the year, according to information provided by the Department of Commerce. The GDP recorded an increase of 1.3%, three tenths less than initially estimated, resulting in an annualized rate of 4.3%. This data represents a slowdown in economic activity compared to the last quarter of the previous year, when a growth of 3.4% had been recorded. The first adjustment in GDP calculations reveals that the U.S. economy experienced a slowdown in the period from January to March, despite remaining in line with analysts' consensus expectations. Despite this decline in the growth rate, it is worth noting that the U.S. economy remains strong compared to the current global economic situation. Consumer spending, which is an important driver of economic growth in the country, showed a 2% advance in the first quarter, following an increase of 3.3% in the previous quarter. This behavior in consumer spending has been partially offset by downward revisions in other aspects such as private inventory investment and federal government spending, although upward revisions have been observed in other areas such as non-residential fixed investment and exports. Throughout the year 2023, the U.S. economy managed to close with an average GDP expansion of 3.1%, dispelling fears of a recession following the impacts of the covid-19 pandemic. Despite this growth, the Federal Reserve (Fed) has had to tighten its monetary policy to contain inflation, keeping interest rates in a range of 5.25% to 5.5%, its highest level since 2001. In a context where prospects for economic activity in the United States have become "somewhat more pessimistic," the Fed has noted an increase in uncertainty and downside risks. In addition, the inflation rate in the country stands at 3.4%, still above the 2% target, which could complicate monetary policy decisions in the future. Core inflation, which is a key indicator for the Fed, has shown a slight year-on-year decrease, but still stands at 3.6%. This scenario of weaker-than-expected economic growth alongside persistent inflation poses challenges for monetary policy in the United States. Moreover, in an election year, economic performance carries significant weight for the government of President Joe Biden, who is lagging in the polls compared to his predecessor, Republican Donald Trump, in key states. The evolution of the economy in the coming quarters will be crucial in determining the direction of economic policies and their impact on the electoral race.