Economic News

U.S. gross domestic product expanded by 1.6% in Q1 2024, significantly below the 2.4% growth forecast by economists. This indicates a sharp slowdown in economic growth compared to the 3.4% growth rate in Q4 2023.

Despite the slower growth, consumer prices increased at a 3.4% pace in Q1, up from 1.8% in the previous quarter. This raises concerns about persistent inflation.

The combination of slowing growth and rising inflation puts into question whether the Federal Reserve will be able to cut interest rates anytime soon. Traders now forecast just one rate cut in 2023.

Treasury yields soared after the GDP report, with the 10-year yield climbing above 4.7% to its highest level since November 2023. This bond market reaction reflects the uncertainty and inflationary pressures signaled by the data.

While still expanding above the Fed's non-inflationary growth estimate of 1.8%, the slowdown was more severe than most economists expected. However, the U.S. economy is still outperforming other advanced economies.

In summary, the Q1 GDP report showed a significant deceleration in U.S. economic growth along with stubborn inflationary pressures, leading to a sharp market reaction and diminished expectations for Fed rate cuts in 2024.