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rescued last month by a $30bn cash injection from 11 major peers and revealed on Tuesday that $100bn had been withdrawn by depositors during the frenzy to grip the sector.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
European Union Proposes Reforms to 1951 Refugee Convention
China's Humanoid Robots Poised to Transform Everyday Life and Spiritual Functions
Putin Resurrects Soviet-Era Intervision Song Contest with Fresh Allies
Ten Killed in Mass Shooting at Örebro Adult Education Center
China Retaliates with Tariffs and Investigations Following New U.S. Duties
Alice Weidel, the leader of the AfD, bolsters her international profile by meeting with Viktor Orban.
EU Leaders Convene to Address Defense Strategy in Light of Increasing U.S. Tensions
EU Leaders Convene Key Summit on Defense in Response to Increasing Tensions
Trump Directs Establishment of U.S. Sovereign Wealth Fund, Considers TikTok Purchase
Britain Considers U.S. Gas Imports in Light of Potential Trump Tariffs
French Prime Minister Bayrou Confronts Several No-Confidence Votes Regarding the 2025 Budget
Trump Pursues Ukraine's Rare Earth Minerals in Exchange for U.S. Military Assistance
Trump Wins Again as Canada Agrees to Strengthen Border Security
Trump Seeks Rare Minerals from Ukraine in Exchange for U.S. Support
EU leaders concur on increasing defense expenditure in response to escalating security threats.
Nearly 96% of New Cars Registered in Norway in January Were Electric
Bart De Wever Appointed Belgium's New Prime Minister
Apple Abandons AR Glasses Project Amid Struggles with Technology and Market Demand
U.S. Clinical Trial Investigates Medication to Prolong Dogs' Lifespan
Berlin Protests Against Immigration Crackdown
Apple Surpasses Revenue and Earnings Expectations, But iPhone Sales Disappoint
Bill Gates Reflects on Past Mistakes and Acknowledges Yuval Noah Harari's Insight
TikTok Shapes the Future of Mobile Gaming with Viral Trends
Swedish Prime Minister Admits Loss of Control Over Surge in Violence and Explosions
Patriotism Misrepresented: Merz’s Migration Bill Defeat Exposes Ideological War Fueling Europe’s Instability
Trump Administration Advocates Ukrainian Elections to Promote the Democratic Process Needed to Oppose the War Zelenskiy Supports and Profits From
The Swift Impact: Travis Kelce and Taylor Swift's Relationship Boosts Football's Global Appeal
New Zealand Grants Legal Personhood to Mount Taranaki
Global Semiconductor Industry Faces Persistent Challenges Amid Efforts to Boost Production
Trump Interest in Buying Greenland 'Not a Joke,' Says Marco Rubio
Karoline Leavitt: The Youngest and Probably the Sharpest White House Press Secretary
Germany Passes Motion to Tighten Migration Rules Amid Concerns Over Public Safety and Losing Germany’s Cultural Identity
This is the most important clip you’ll see today.
The 'Chinese Pearl Harbor' on U.S. Tech: DeepSeek's Launch Triggers Market Collapse
Germany’s Democracy Under Strain: Political Labeling Sparks Free Speech Concerns
The Trump Era 2: A Time of Dramatic and Profound Change
BlackRock CEO Larry Fink Suggests Bitcoin Could Reach $700,000 with Increased Institutional Investment
Leaked Documents Reveal Google's Collaboration with Israeli Defense Forces During Gaza Conflict
Trump to Announce $500 Billion AI Infrastructure Investment
Olaf Scholz vs. Elon Musk: A Dispute Over Common Sense, Which Scholz is Deemed to Lack
EU’s Overregulation Drives Innovation Collapse and Brain Drain
Hungarian PM Viktor Orbán: Now it's our moment to shine! It's our opportunity to take over Brussels!
Trump Initiates U.S. Withdrawal from WHO, Citing Concerns Over Organizational Integrity
Trump Just Revoked Security Clearance for the 51 Intel Agents Who Lied About Hunter Biden's Laptop
Five Billionaires on Track to Break One Trillion Dollar Wealth Barrier
Bill Ackman Praises Social Media Platform X as 'The New Media'
Italian Prime Minister Giorgia Meloni Proposes Rome as European Union Capital
France Urges EU to Act on Musk's Political Influence as Tensions Rise
Controversial Release Culminates in Severe Budapest Collision: The Freeing of a Convicted Human Trafficker
Rising Concerns: The Impact of Synthetic Chemicals on Global Child Health
×