The U.S. Bureau of Economic Analysis (BEA) released its advance estimate for the first quarter of 2023 and the news is not good for Americans or the Biden administration's promise to "build back better."
According to the BEA's release, real GDP "increased at an annual rate of 1.1 percent in the first quarter of 2023," lower than the 2.0 percent expected in a significant slowdown from the fourth quarter of 2022 in which real GDP had increased 2.6 percent.
The U.S. economy grew at a 1.1% annualized rate in Q1. https://t.co/qHGf5n47pp
— BEA News (@BEA_News) April 27, 2023
The U.S. government attributed the economic deceleration to "a downturn in private inventory investment and a slowdown in nonresidential fixed investment" which were "partly offset by an acceleration in consumer spending, an upturn in exports, and a smaller decrease in residential fixed investment" while imports "turned up."
As the economy showed signs of tipping into a worsening recession, the BEA's measure of inflation showed price increases accelerating upwards. In the first quarter of 2023, the price index for gross domestic product increased 3.8 percent, more than the 3.6 percent increase in the fourth quarter of 2022.
The PCE price index — known as the Federal Reserve's preferred inflation gauge — made an even more dramatic jump, increasing 4.2 percent in the first quarter of 2023 after increasing 3.7 percent at the end of last year. What's more, economists estimated in a huge miss that the PCE price index would come in at just 0.5 percent.
⚠️BREAKING:
— Investing.com (@Investingcom) April 27, 2023
*U.S. Q1 PCE PRICE INDEX RISES 4.2% Y/Y; EST. 0.5%; PREV. 3.7%
🇺🇸 🇺🇸 pic.twitter.com/AbBzeShyCU
Core PCE inflation — which excludes volatile food and energy prices — also surged to a 4.9 percent increase to kick of 2023 after rising 4.4 percent in the fourth quarter of 2022.
🚨US economic growth slowed to 1.1% annual rate in the 1st quarter. The vice grip of high inflation and higher interest rates. Consumers have started to cut spending. Manufacturing contracting. In the decade before the pandemic, our economy grew at 2.2% a year, according to the…
— Dagen McDowell (@dagenmcdowell) April 27, 2023
Both the GDP and PCE numbers are movements in the wrong direction for Americans seeking relief from rising prices and as President Joe Biden now tries to build a case for his reelection after his broken 2020 promise to build America back better. Don't forget, Americans have also taken 24 consecutive months of pay cuts to their real wages due to inflation already.
"Today's GDP report confirms what ordinary Americans and small businesses already know: The economy is stagnating," noted Job Creators Network President and CEO Alfredo Ortiz. "The continuation of the slow- or no-growth economy under President Biden is a direct result of bad Democrat policies that make it more difficult for small businesses to operate and expand," he explained.
"This anemic growth will only get worse if the Biden administration's agenda of tax hikes, new regulations, and reckless spending is further implemented," Ortiz warned. "Unless Republicans can block these anti-small business measures, the economy will be thrown back into recession."
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