What’s up with the weak GDP growth?
Marketplace All-in-One
Marketplace
4.5 • 1.4K Ratings
🗓️ 25 April 2024
⏱️ 7 minutes
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Summary
The U.S. economy grew by just 1.6% last quarter — falling very short of expectations. At the same time, inflation was up, according to the latest PCE. What’s the Federal Reserve’s next move? Plus, small businesses could see big productivity gains by collaborating with other firms, a McKinsey report shows.
Transcript
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| 0:00.0 | U.S. economic growth slowed way down, but there's a but. From marketplace, I'm Sabrie Beneshore, |
| 0:08.6 | in for David Brunkachio. According to the Bureau of Economic Analysis, the economy grew at an annual pace of 1.6% in the first |
| 0:15.9 | quarter. |
| 0:16.9 | That is far below the 3.4% growth rate in the previous quarter. |
| 0:21.5 | It's the first time growth is dipped below 2% in |
| 0:23.9 | one and a half years. Here to talk us through it is Diane Swank, Chief |
| 0:27.6 | Economist at Audit Tax and Advisory firm KPMG. Hi Diane. Good morning. |
| 0:31.8 | 1.6% does not sound great. |
| 0:34.4 | What do you make of it? |
| 0:35.4 | It isn't a great overall number, but the main reasons for that weakness, there were three of them. |
| 0:40.0 | One of them was a huge widening in the trade deficit because we brought in so many more imports than we |
| 0:46.3 | exported because the US consumer still held up in the first quarter. In fact, we also saw an acceleration in spending on things like services for the second |
| 0:56.0 | quarter in the row and business investment picked up as well. |
| 0:59.8 | We also had weakness in federal spending. |
| 1:01.6 | Remember we at that continuing resolution? They couldn't |
| 1:03.6 | decide on a budget? Well that's been decided on now and we'll see a bounce back in that in the second |
| 1:09.2 | quarter. The last reason that there was any weakness was that we further drained inventories after drawing them down in the fourth quarter. |
| 1:17.0 | That is actually strength going forward. |
| 1:20.0 | The overall number was a bit of a head fake because domestic demand actually held up fairly strong. |
| 1:26.3 | The other big number to come out this morning is the personal consumption expenditures price index, inflation. |
| 1:31.2 | It was 3.4% in the first quarter compared with 1.8% in the fourth |
| 1:37.5 | quarter last year. That's not the right direction. |
... |
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