The US economy grew at a slower pace than expected in the first quarter of 2024. The initial estimate for Gross Domestic Product (GDP) came in at 1.6%, below market forecasts of 2.5% and significantly slower than the previous quarter’s 3.4%. This has raised concerns about a potential economic slowdown.
US Data Released on 25/04/24: Source dailyfx
However, there’s another side to the story. Inflation, as measured by the price index for GDP, increased sharply compared to the last quarter. This suggests that while the economy might be expanding at a slower rate, prices are rising at a faster pace.
The Federal Reserve, the US central bank, is closely monitoring both growth and inflation. While the lower GDP growth might have pushed for interest rate cuts earlier, the high inflation figures make that less likely. The market currently expects a modest interest rate increase in November. A more precise picture of the US economy will be available on May 30th when the second estimate of Q1 GDP is released.
US DOLLAR INDEX DAILY CHART
Chart by TradingView