On Thursday afternoon, President Joe Biden will address the economy during a campaign event in Syracuse, New York. The speech comes at a time when a report has shown a significant slowdown in the nation’s economy, with growth dropping to a 1.6% annual pace in the first quarter of the year due to high interest rates.
According to the Commerce Department’s report released on Thursday, the deceleration in the gross domestic product (GDP) from an impressive 3.4% growth rate in the previous quarter was largely attributed to a surge in imports and reductions in business inventories, which both had a negative impact on growth. Despite these challenges, key components of the economy remain robust, with strong contributions from both households and businesses in driving economic growth last quarter. Economist Paul Ashworth noted that there is still positive momentum in the economy, despite the volatile import and inventory figures.
However, inflation remains a concern for economists as rates increased to 3.4% annual rate in the first quarter of this year compared to 1.8% in the previous quarter and core inflation excluding food and energy prices also rose to 3.7%. This rise is attributed to supply chain disruptions caused by Russia’s invasion of Ukraine and other geopolitical tensions that have affected global commodity prices.
Consumer spending continues to be a key driver of economic activity with an increase of 2.5% annual rate in