by: JD Heyes
(Natural News) President Joe Biden’s economic policies are proving to be much more disastrous than first thought, because the federal government’s own figures indicate.
In the primary quarter, the U.S. economy grew by paltry 1.1 percent, a decrease from a still-measly 2.6 percent growth seen within the fourth quarter, as per the Bureau of Economic Evaluation (BEA). The expansion rate also fell in need of the anticipated 2 percent as projected by economists, The Epoch Times reported.
“This was the slowest quarterly growth because the second quarter of 2022,” the outlet continued.
Over the past 12 months, the Federal Reserve has raised rates of interest, leading to a rise of the benchmark Fed funds rate by 475 basis points, the very best level since late 2007, however it ought to be noted that the Fed had to lift rates so as to combat the huge inflation brought on by massive Democratic spending bills that Biden signed, adding massive amounts to the national debt.
Currently, the goal range stands at 4.75-5.00 percent. In accordance with the CME FedWatch Tool, investors anticipate the Federal Open Market Committee to lift rates by one other 25 basis points on the upcoming policy meeting next month. The rising-rate environment has caused borrowing to grow to be costlier, making it difficult for businesses and consumers to administer with the already heightened inflation.
And the inflationary cycle isn’t done, apparently.
The most recent quarter brought a surprising surge in inflation for market observers. The GDP Price Index, which measures the costs of products and services produced in the USA, unexpectedly increased to 4 percent through the first three months of 2023. That marks a rise from the previous quarter’s 3.9 percent and exceeds the market’s predicted rate of three.7 percent, The Epoch Times noted.
“Unfortunately, the sharp slowdown in economic growth last quarter was not sufficient to temper price inflation,” Scott Anderson, chief economist on the Bank of the West Economics, wrote in an investor’s note. “Despite weakening growth and the elevated probability of a gentle U.S. recession on the horizon, we consider persistent core price inflation will prompt the Fed to lift rates of interest by one other quarter percentage point next month before an prolonged pause.”
Throughout the first quarter, there was a major rise in the non-public consumption expenditure (PCE) price index, increasing from 3.7 percent to 4.2 percent. The observed rate was much higher than the anticipated 0.5 percent. Similarly, the core PCE price index, which doesn’t include the volatile food and energy sectors, climbed to 4.9 percent.
In the primary quarter, the GDP Sales Index, which calculates the products and services produced on the market within the national economy, surged to three.4 percent, surpassing the market’s predicted rate of two.3 percent. The observed growth was also higher than the 1.1 percent increase within the fourth quarter.
The expansion in the actual gross domestic product (GDP) was primarily driven by increased consumer and government spending, in addition to exports. Nevertheless, this was offset by declines in private inventory investment and residential fixed investment, the news outlet noted further.
Quarter-over-quarter, real consumer spending surged by 3.7 percent, in comparison with 1 percent previously. Despite a robust begin to the 12 months, Morning Seek the advice of’s chief economist John Lee highlighted that “the buyer ended the quarter on a sour note, calling into query the sustainability of economic growth moving forward.”
“While private investment may pick back up later this 12 months, it tends to be highly volatile from quarter to quarter,” he told the Times in an email. “With out a robust consumer, we’re more likely to see more volatility and uncertainty in economic activity through the top of the 12 months.”
“The economy’s biggest problem now could be inflation, a direct results of the federal government’s COVID-related stimulus. The worth of stimulus today is all the time a slowdown tomorrow, and now it’s tomorrow,” added Ryan Young, senior economist on the Competitive Enterprise Institute, in an email.
“Trillions of dollars of stimulus spending and money creation caused the inflation that the Federal Reserve continues to be struggling to bring down. Rising rates of interest are a crucial a part of that effort, but they’re a serious reason why GDP growth is just about half what it ought to be. Stimulus isn’t free,” he added.
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