The initial estimate by the Commerce Department's Bureau of Economic Analysis showed that the Gross Domestic Product (GDP) in the first quarter of this year increased by 1.6%, falling short of the 2.4% rate forecasted by economists. Consumer spending played a significant role in supporting this growth, although it was slower compared to the 3.4% rate seen in the previous quarter. Over the years, U.S. central bank officials have considered a 1.8% growth rate as non-inflationary, indicating that the current pace of expansion is above this threshold.
The International Monetary Fund recently revised its growth projection for the United States in 2024, citing a more optimistic outlook compared to its January forecast. This revision was based on the strength of employment and consumer spending, with job gains averaging 276,000 per month during the first quarter. This increase in employment figures signals a positive trend in the labor market, which has also contributed to the overall economic performance.
Since late 2022, the U.S. economy has been defying predictions of a downturn, particularly following the Federal Reserve's aggressive actions to combat inflation through raising interest rates. Despite concerns about inflation, the country has been outperforming other advanced economies, with consumers benefiting from lower mortgage rates and businesses taking advantage of a period of refinancing debt before the tightening cycle initiated by the Fed.