Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

US recession fears grow as economy slows sharply in first quarter

US recession fears grow as economy slows sharply in first quarter

Growth eases by far more than expected between January and March to the extent financial markets and many economists now believe recession is inevitable.

The world's largest economy slowed sharply in the first quarter of the year, according to the first official estimate which has raised fears of recession ahead.

Growth was measured at an annualised rate of 1.1% between January and March, the Commerce Department said.

Economists had been expecting a figure of 2%.

The slump followed growth of 2.6%, by the same measure, during the final three months of 2023.

The growth was mainly explained by consumer spending holding up, probably due to a low unemployment rate, as the aggressive pace of interest rate rises to tame inflation hit other areas, such as the housing market, harder.

The data also pointed to a big reduction in business inventories - behaviour that is typically seen in anticipation of an economic downturn.

Economists are split on the prospect of recession being declared.

The definition of a technical recession across most of the world is two consecutive quarters of negative growth.

The Federal Reserve has raised its main interest rate to a range of 4.75%-5% and is expected to hike again next month


By that measure, the US economy would have been in recession during the first half of last year.

But the country defines such a contraction differently. It is determined by a committee of experts.

The US economy's low jobless rate largely prevented a recession being declared last year but conditions are darkening for 2023.

Many economists say the cumulative impact of the Fed Reserve's rate hikes has yet to be fully felt while the pace of hiring is slowing.

Many banks, which are charging higher interest rates as a result, have also muddied the waters due to a tightening of lending standards since the failure last month of two major banks - Silicon Valley Bank and Signature Bank.

There are signs the crisis of confidence is not over yet as First Republic, a major regional lender, has seen a fresh run on its share price this week taking it to fresh lows.

It was effectively rescued last month by a $30bn cash injection from 11 major peers and revealed on Tuesday that $100bn had been withdrawn by depositors during the frenzy to grip the sector.

It has been reported that the federal government is unwilling to engineer a rescue.

Another political challenge is also gaining traction.

The Republican-dominated House of Representatives has moved to pressure President Biden over a looming debt ceiling deadline by voting to raise the limit only in exchange for big spending cuts.

A default would plunge the US economy into chaos so it forces Mr Biden to negotiate with his political opponents.

Brian Klimke, investment director at Cetera Investment Management, said of the economic growth figures: "January was really the standout month and since then we've seen weakness in February and March, which has really been slowly dragging down the economy.

"If we're looking to the future, data does seem to be continuing to weaken.

"The good news is we do think a recession could be mild."

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
We will protect them from the digital Wild West.’ Another country will ban social media for under-16s
Heineken announces cut of 6,000 jobs due to declining beer demand
Apple iPhone Lockdown Mode blocks FBI data access in journalist device seizure
Belgium: Man Charged with Rape After Faking Payment to Sex Worker
KPMG Urges Auditor to Relay AI Cost Savings
Canada Opens First Consulate in Greenland Amid Rising Geopolitical Tensions
China unveils plans for a 'Death Star' capable of launching missile strikes from space
Investigation Launched at Winter Olympics Over Ski Jumpers Injecting Hyaluronic Acid
U.S. State Department Issues Urgent Travel Warning for Citizens to Leave Iran Immediately
Wall Street Erases All Gains of 2026; Bitcoin Plummets 14% to $63,000
Eighty-one-year-old man in the United States fatally shoots Uber driver after scam threat
Political Censorship: French Prosecutors Raid Musk’s X Offices in Paris
AI Invented “Hot Springs” — Tourists Arrived and Were Shocked
France Begins Phasing Out Zoom and Microsoft Teams to Advance Digital Sovereignty
Tech Market Shifts and AI Investment Surge Drive Global Innovation and Layoffs
Global Shifts in War, Trade, Energy and Security Mark Major International Developments
Markets Jolt as AI Spending, US Policy Shifts, and Global Security Moves Drive New Volatility
Tesla Ends Model S and X Production and Sends $2 Billion to xAI as 2025 Revenue Declines
Starmer Signals UK Push for a More ‘Sophisticated’ Relationship With China in Talks With Xi
Shopping Chatbots Move From Advice to Checkout as Walmart Pushes Faster Than Amazon
The AI Hiring Doom Loop — Algorithmic Recruiting Filters Out Top Talent and Rewards Average or Fake Candidates
Putin’s Four-Year Ukraine Invasion Cost: Russia’s Mass Casualty Attrition and the Donbas Security-Guarantee Tradeoff
Storm-Triggered Landslide in Sicily Pushes Cliffside Homes to the Edge as Evacuations Continue
WhatsApp Develops New Meta AI Features to Enhance User Control
Germany Considers Gold Reserves Amidst Rising Tensions with the U.S.
Michael Schumacher Shows Significant Improvement in Health Status
Trump Claims “Total” U.S. Access to Greenland as NATO Weighs Arctic Basing Rights and Deterrence
Air France and KLM Suspend Multiple Middle East Routes as Regional Tensions Disrupt Aviation
Poland delays euro adoption as Domański cites $1tn economy and zloty advantage
Gold Jumps More Than 8% in a Week as the Dollar Slides Amid Greenland Tariff Dispute
Boston Dynamics Atlas humanoid robot and LG CLOiD home robot: the platform lock-in fight to control Physical AI
United States under President Donald Trump completes withdrawal from the World Health Organization: health sovereignty versus global outbreak early-warning access
Tech Brief: AI Compute, Chips, and Platform Power Moves Driving Today’s Market Narrative
NATO’s Stress Test Under Trump: Alliance Credibility, Burden-Sharing, and the Fight Over Strategic Territory
Greenland, Gaza, and Global Leverage: Today’s 10 Power Stories Shaping Markets and Security
High-Speed Train Collision in Southern Spain Kills at Least Twenty-One and Injures Scores
No Sign of an AI Bubble as Tech Giants Double Down at World’s Largest Technology Show
Trump to hit Europe with 10% tariffs until Greenland deal is agreed
Cybercrime, Inc.: When Crime Becomes an Economy. How the World Accidentally Built a Twenty-Trillion-Dollar Criminal Economy
Woman Claiming to Be Freddie Mercury’s Secret Daughter Dies at Forty-Eight After Rare Cancer Battle
EU Seeks ‘Farage Clause’ in Brexit Reset Talks With Britain
Germany Hit by Major Airport Strikes Disrupting European Travel
Russia Deploys Hypersonic Missile in Strike on Ukraine
There is no sovereign immunity for poisoning millions with drugs.
Béla Tarr, Visionary Hungarian Filmmaker, Dies at Seventy After Long Illness
German Intelligence Secretly Intercepted Obama’s Air Force One Communications
The U.S. State Department’s account in Persian: “President Trump is a man of action. If you didn’t know it until now, now you do—do not play games with President Trump.”
President Trump Says United States Will Administer Venezuela Until a Secure Leadership Transition
Delta Force Identified as Unit Behind U.S. Operation That Captured Venezuela’s President
Europe’s Luxury Sanctions Punish Russian Consumers While a Sanctions-Circumvention Industry Thrives
×