U.S. economic activity grew at a slower pace than expected in the first quarter of 2023, flashing further signs that the economy is slowing down as recession fears swirl and the Federal Reserve considers more interest rate increases.
The Bureau of Economic Analysis’ advance estimate of first quarter U.S. gross domestic product (GDP) showed the economy grew at an annualized pace of 1.1% during the period, slower than consensus forecasts. Economists surveyed by Bloomberg had the U.S. economy growing at an annualized pace of 1.9% during the first three months of 2022.
The print came in significantly cooler than the previous two quarters, which saw annualized growth at 2.9% and 3.2% respectively.
A slowdown in single-family construction was a factor in Thursday’s lower-than-expected US GDP.
The BEA attributed the quarterly slowdown to wholesale trade, headlined by machinery, equipment and supplies, and manufacturing. A slowdown in single-family construction also propelled the decline in growth rate, per the BEA.
Meanwhile, growth in consumer spending in goods and services helped keep annualized growth positive for the quarter. Motor vehicles and parts led goods spending while healthcare and food services and accommodations led services.
Overall, the slowdown in GDP is in line with other recent economic data and weakening consumer confidence about the economy. Oxford Economics lead US economist Michael Pearce had noted prior to the report that most of the growth would come in the early part of the first quarter. March retail sales came in lower than expected, and some executives have recently said on earnings calls they’re starting to see demand slow down within their businesses.
“The consumer ended the quarter on a sour note, calling into question the sustainability of economic growth moving forward,” Morning Consult Chief Economist John Leer said Thursday. “While private investment may pick back up later this year, it tends to be highly volatile from quarter to quarter. Without a robust consumer, we’re likely to see more volatility and uncertainty in economic activity through the end of the year.”
The first quarter was likely the high water mark for economic growth, according to Oxford Economics. The research team sees marginal GDP growth in the second quarter followed by a recession in the back half of 2023.
“Growth risks are tilted decidedly to the downside as the drivers that buoyed activity at the start of 2023 lose steam while the crunch from tighter credit conditions could be more severe than we’ve already factored into our forecast,” Oren Klachkin, Oxford Economics’ lead US economist, wrote in a note to clients on Thursday.
The report also revealed a 4.9% increase in the personal consumption expenditures price index, excluding food and energy prices. Economists surveyed by Bloomberg had expected a 4.7% increase. The index, known as Core PCE, is a closely watched inflation gauge for the Federal Reserve.
OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.
However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.
The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.
Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.
The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.
The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.
This report by The Canadian Press was first published Oct. 17, 2024.
OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.
In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.
The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.
Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.
In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.
It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.
This report by The Canadian Press was first published Oct 16, 2024.
OTTAWA – Statistics Canada says manufacturing sales in August fell to their lowest level since January 2022 as sales in the primary metal and petroleum and coal product subsectors fell.
The agency says manufacturing sales fell 1.3 per cent to $69.4 billion in August, after rising 1.1 per cent in July.
The drop came as sales in the primary metal subsector dropped 6.4 per cent to $5.3 billion in August, on lower prices and lower volumes.
Sales in the petroleum and coal product subsector fell 3.7 per cent to $7.8 billion in August on lower prices.
Meanwhile, sales of aerospace products and parts rose 7.3 per cent to $2.7 billion in August and wood product sales increased 3.8 per cent to $3.1 billion.
Overall manufacturing sales in constant dollars fell 0.8 per cent in August.
This report by The Canadian Press was first published Oct. 16, 2024.
