US economic growth fell to almost a two-year low last quarter, and inflation rose to 3.7%. Bloomberg writes about this.
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According to preliminary government estimates, gross domestic product has increased by 1.6% year on year, which is lower than all economists’ forecasts. The economy's main engine of growth—personal spending—grew at a slower-than-expected rate of 2.5%, and core inflation rose 3.7% higher than expected.
If growth continues to slow gradually, but inflation will rise sharply again, expectations of a Fed rate cut in 2024 will begin to look increasingly unattainable.
The acceleration in inflation in the first quarter was driven by a 5.1% jump in service sector inflation, excluding housing and energy, which almost double the pace of the previous quarter.