US economic growth likely slowed sharply in the first quarter as a wave of Covid-19 cases curbed activity, but retained sufficient underlying strength to keep the expansion on track amid headwinds from soaring inflation and rising interest rates.
The growth rate, which is anticipated to be the slowest since the recession triggered by the pandemic ended nearly two years ago, would also reflect a surge in imports. Economists are split over whether inventories would contribute to gross domestic product growth after they accounted for the bulk of the acceleration in GDP in the fourth quarter.
The Commerce Department’s advance first-quarter GDP report on Thursday could lead to warnings of stagflation and recession from some quarters, but economists cautioned that a low growth number would not be a true picture of the economy, noting that other measures of output such as aggregate hours worked and industrial production showed sustained growth last quarter.
“We do have to remember the context of why it is slowing,” said James Knightley, chief international economist at ING in New York. “The Omicron wave, which did hit confidence and people’s movements, largely explains it. And now that we’ve come out the other side of it in reasonable shape, we should look forward to better growth for the second quarter.”
According to a Reuters survey of economists, GDP growth likely increased at a 1.1 per cent annualised rate last quarter. That would be a big step down from the robust 6.9 per cent pace logged in the fourth quarter. Estimates ranged from as low as a 1.4 per cent rate of contraction to as high as a 2.6 per cent growth pace.
The Federal Reserve is expected to hike interest rates by 50 basis points next Wednesday, and soon start trimming its asset holdings. The US central bank raised its policy interest rate by 25 basis points in March, the first hike in more than three years, as part of its fight against inflation. Annual consumer prices increased in March at their quickest pace in 40 years.
But the GDP survey was conducted before the release on Wednesday of data showing a record goods trade deficit in March and continued increases in retail and wholesale inventories.
The jump in the goods trade deficit, driven by robust import growth, led Goldman Sachs to lower its first-quarter GDP estimate to a 1.3 per cent rate from a 1.5 per cent pace. Citigroup predicted the economy contracted at a 1.2 per cent rate.
ঈদকে সামনে রেখে রাজধানীর বিভিন্ন এলাকার ফুটপাতকেন্দ্রিক বেচাকেনা জমে উঠেছে। তবে লাগামহীন চাঁদাবাজির কারণে ব্যবসার লাভের টাকা ঘরে তুলতে পারছেন না ফুটপাতের হকাররা।
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