Share this article
The US economy experienced a more significant cooling than anticipated in the first quarter of 2024, with the gross domestic product (GDP) measuring an annualized rate of 1.6%, according to the Commerce Department. This marks the weakest pace of growth since the second quarter of 2022 when the economy contracted, and falls below the 2.2% rate projected by economists in a FactSet poll.
The slowdown in economic growth can be attributed to several factors, including a sharp increase in imports, a decrease in private sector inventory investment, and a notable deceleration in government spending. Consumer spending, which accounts for a significant portion of economic output, also slowed earlier this year but continued to fuel growth in the first quarter.
The weaker-than-expected GDP reading has raised concerns about the possibility of stagflation, a combination of high inflation and low economic growth. This scenario has led to a decline in risk assets, with the Dow tumbling by 500 points at the opening bell, the S&P 500 falling 1.3%, and the Nasdaq Composite declining by 2%.
Despite the economic slowdown, the Federal Reserve appears to be in no rush to cut interest rates. Inflation has slowed considerably over the past year, but the pace of its descent has stalled in recent months. The Fed is likely to begin cutting rates once it is convinced that inflation is under control and on track to reach its 2% target. However, the central bank could reduce rates sooner than expected if the economy suddenly falters.
The latest GDP reading has dealt some damage to the narrative that the US economy might be overheating, which could shift the Fed’s timetable for initiating the rate easing cycle.
Quincy Krosby, chief global strategist at LPL Financial, suggests that the softer first read of Q1 GDP could bring July back into play for the start of rate cuts.
The crypto market, which is sensitive to macroeconomic developments, has been impacted by the renewed fears of U.S. stagflation. Bitcoin, the leading cryptocurrency by market value, traded near $62,400 at press time, down 2.5% on a 24-hour basis. Ether (ETH) traded 3% lower at $3,200.
The market appears to be balancing the threat of stagflation against potential bullish factors, such as a liquidity injection from the Treasury General Account (TGA) and the launch of Hong Kong’s bitcoin ETFs. However, news that mainland Chinese investors won’t be able to trade the ETFs has somewhat tempered the bullishness surrounding the launch.
Share this article
The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not give personalized investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information.
Crypto Briefing may augment articles with AI-generated content created by Crypto Briefing’s own proprietary AI platform. We use AI as a tool to deliver fast, valuable and actionable information without losing the insight – and oversight – of experienced crypto natives. All AI augmented content is carefully reviewed, including for factural accuracy, by our editors and writers, and always draws from multiple primary and secondary sources when available to create our stories and articles.
You should never make an investment decision on an ICO, IEO, or other investment based on the information on this website, and you should never interpret or otherwise rely on any of the information on this website as investment advice. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO, or other investment. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities.
See full terms and conditions.
