Last Thursday, the Bureau of Economic Analysis released its advance estimate for 2024’s first-quarter real GDP growth. At 1.6 percent, it is the worst quarterly performance since the economy contracted by 0.6 percent almost two years ago in the second quarter of 2022. This was a growth level one-third below economists’ expectations of 2.4 percent. It is also a precipitous drop from 2023’s fourth quarter rate of 3.4 percent and 2023’third quarter rate of 4.9 percent.
This slower growth comes on the heels of higher inflation. The March report on overall prices showed the Consumer Price Index for all Urban Consumers rose 3.5 percent over the last year — 3.8 percent when core inflation (minus food and energy) was considered. That figure was higher than any since September 2023 and marked the third consecutive monthly increase.
Then on Friday, came more bad inflation news, this time on personal consumer expenditures excluding food and energy. This is the Federal Reserve’s preferred inflation gauge, and in March it rose 2.8 percent compared to a year ago — the same as in February and above expectations.
This jujitsu juxtaposition of higher inflation and lower growth must not be underestimated. Gone is the charade of someone who has effectively never worked in the private sector telling working Americans how good the economy is. Joe Biden, who loves to harken back to blue-collar Scranton roots, should have known better. Americans now do.
There is but one real measure of the economy for them: Am I putting more on my family’s table? Inflation’s insidious impact is its cumulative effect. Just because inflation’s rate of increase slows (which it isn’t) does not mean its past effect is wiped away (which it’s not). Now the economic growth that the administration hoped would at least outstrip inflation’s increase — and reverse some of that cumulative effect — is not.
Read more at THEHILL.com
What Are Your Thoughts?
