The US economy grew much less in the first quarter than economists expected. Companies, among others, were more cautious and invested less. At the same time, consumer spending rose sharply, partly due to the purchase of more cars. During this quarter, American households spent less money.
The growth of the US economy reached 1.1 percent, compared to 2.6 percent in the last three months of last year. On average, economists expected US economic growth to reach 1.9 percent.
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Accrued interest
The decline in growth may be a result of the sharp rise in interest rates in the United States. Another increase is expected by the Fed as inflation remains high. But a cold economy may prompt central bankers to be cautious. Meanwhile, the inflation rate closely monitored by Fed policymakers has risen faster than at the end of last year and also faster than expected.
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The 1.1 percent increase is an annual figure. This means that growth is artificially extended from quarter to quarter as if it remained at this level for a whole year. Under the method used in Europe, growth in the United States would have been 0.3 percent in the first quarter.
