May 7, 2024
US economy slow but resilient - NRF
Economic growth in the US slowed during the first three months of the year, but consumers are still spending more than last year, says Jack Kleinhenz, chief economist at National Retail Federation (NRF).
“The US economy lost some spring in its step during the first quarter as the pace of growth declined and the downshift came with an unexpected bout of inflation,” he says, noting that prices for services are still increasing even as prices for goods level off. “But even with signs that the economic expansion is decelerating, the economy remains resilient, boosted by a solid job market and continued spending by consumers and businesses.”
The May issue of NRF’s Monthly Economic Review says gross domestic product grew only 1.6 percent in the first quarter, less than half the 3.4 percent seen in the fourth quarter of 2023 and the lowest level since 2.1 percent in the second quarter of last year.
While substantial progress was made on inflation since its peak in 2022, high prices are sticking around longer than expected, says NRF. The Personal Consumption Expenditures Price Index followed by the Federal Reserve showed that year-over-year inflation – driven largely by prices for services – shot up to 3.4 percent during the first quarter. That compared with 1.8 percent in the previous quarter.
Nonetheless, “consumers clearly remain willing to spend on both goods and services despite ongoing cost pressures,” Kleinhenz says. Consumer spending growth fell from 3.3 percent in the fourth quarter but still grew 2.5 percent year over year in the first quarter. And total retail sales as reported by the US Census Bureau were stronger than expected in March, rising four percent year over year compared with 2.1 percent in February.


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