WASHINGTON — The U.S. economy slowed greatly from January through March, slowingdown to simply a 1.1% yearly rate as greater interest rates hammered the realestate market and services lowered their stocks.
Thursday’s quote from the Commerce Department revealed that the country’s gross domestic item — the broadest gauge of financial output — damaged after growing 3.2% from July through September and 2.6% from October through December.
But customer costs, which accounts for about 70% of U.S. financial activity, stayed resistant, growing at a 3.7% yearly rate, the fastest such rate in almost 2 years. Spending on products, in specific, was strong: It increased at its fastest rate because the 2nd quarter of 2021.
Economists hadactually been anticipating general GDP to grow at a 1.9% rate in the January-March quarter. Behind much of the quarter’s weakpoint was a sharp decrease in organization stocks, which deducted approximately 2.3 portion points from general development. Companies normally slash their stocks when they expect a coming decline.
The economy’s downturn shows the effect of the Federal Reserve’s aggressive drive to tame inflation, with 9 interest rate walkings over the past year. The rise in loaning expenses is anticipated to sendout the economy into a economiccrisis atsomepoint this year. Though inflation has gradually relieved from the four-decade high it reached last year, it stays far above the Fed’s 2% target.
The realestate market, which is specifically susceptible to greater loan rates, hasactually been damaged. And numerous banks have tightenedup their financing requirements giventhat the failure last month of 2 significant U.S. banks, making it even harder to obtain to buy a home or a vehicle or to broaden a company.
“The economy had less forward momentum at the start of this year than formerly believed,” Andrew Hunter of Capital Economics composed in a researchstudy note. “We continue to anticipate the drag from greater interest rates and tighteningup credit conditions to push the economy into a moderate economiccrisis quickly.″
Many financialexperts state the cumulative effect of the Fed’s rate