The US economy grew less than initially estimated in the first quarter of this year, the US government reported yesterday, due to weaker consumer spending.
The world’s biggest economy expanded 1.3 percent in the January-to-March period, the US Department of Commerce said, below the 1.6 percent figure published last month. This revision was in line with analysts’ expectations.
Both growth numbers mark a significant deceleration from the 3.4 percent expansion seen in the final quarter of last year.
Photo: Bloomberg
While US President Joe Biden and officials maintain that the US economy remains robust, he is struggling to convince voters of his performance on the economic front ahead of November’s presidential election.
“The update primarily reflected a downward revision to consumer spending,” the commerce department said of yesterday’s revision.
Overall, GDP growth in the first quarter was supported by consumer spending, business investment and government spending.
But outlooks on the US economy have become gloomier with reports of rising uncertainty and worries over risks, even though growth broadly continued recently, the Federal Reserve said on Wednesday.
The views come as discretionary spending cooled and consumers became more sensitive to costs in recent weeks, while job gains were largely modest to negligible, the US central bank said in its “Beige Book” survey of economic conditions.
Across the US, economic activity remained positive from early last month to the first half of this month. But conditions varied across industries and districts, the report said.
After rapidly hiking interest rates in 2022, the Fed has in recent months held them at a high level in hopes of stamping out stubborn inflation by lowering demand.
But at policymakers’ most recent meeting this month, they cited a lack of further progress towards a two percent inflation target in keeping the benchmark lending rate unchanged.
All eyes are on indications that the Fed could start cutting rates — and a cooler economy could spur such optimism.
With prices still rising, consumers in most of the Fed’s 12 districts “pushed back against additional price increases,” leading to smaller profit margins, the Fed report said.
Meanwhile, some districts have “noted a pullback in hiring expectations amid weaker business demand.”
“Overall outlooks grew somewhat more pessimistic amid reports of rising uncertainty and greater downside risks,” it added.
Such uncertainties include the level of consumer demand, timing of Fed rate cuts and outcome of the US presidential election.
The Fed is due to hold its next policy meeting in the middle of next month.
MULTIFACETED: A task force has analyzed possible scenarios and created responses to assist domestic industries in dealing with US tariffs, the economics minister said The Executive Yuan is tomorrow to announce countermeasures to US President Donald Trump’s planned reciprocal tariffs, although the details of the plan would not be made public until Monday next week, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. The Cabinet established an economic and trade task force in November last year to deal with US trade and tariff related issues, Kuo told reporters outside the legislature in Taipei. The task force has been analyzing and evaluating all kinds of scenarios to identify suitable responses and determine how best to assist domestic industries in managing the effects of Trump’s tariffs, he
TIGHT-LIPPED: UMC said it had no merger plans at the moment, after Nikkei Asia reported that the firm and GlobalFoundries were considering restarting merger talks United Microelectronics Corp (UMC, 聯電), the world’s No. 4 contract chipmaker, yesterday launched a new US$5 billion 12-inch chip factory in Singapore as part of its latest effort to diversify its manufacturing footprint amid growing geopolitical risks. The new factory, adjacent to UMC’s existing Singapore fab in the Pasir Res Wafer Fab Park, is scheduled to enter volume production next year, utilizing mature 22-nanometer and 28-nanometer process technologies, UMC said in a statement. The company plans to invest US$5 billion during the first phase of the new fab, which would have an installed capacity of 30,000 12-inch wafers per month, it said. The
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
RSS