What's happened
The US economy shows signs of stagflation concerns as GDP growth slows to 1.6% in Q1 2024, below expectations, while inflation rises above forecasts, with the core PCE index up 3.7%. Stocks tumble as growth slows and inflation rises, with the Dow Jones down 1.8%.
Why it matters
The slowdown in economic growth coupled with rising inflation raises concerns about stagflation, impacting market sentiment and potentially delaying interest rate cuts by the Federal Reserve. Investors are closely monitoring the situation as it could have significant implications for the economy and financial markets.
What the papers say
The latest GDP and inflation readings have sparked worries about stagflation, with some analysts highlighting the challenges posed by slowing growth and rising inflation. While some remain optimistic about consumer spending and solid economic activity, others are concerned about the impact on interest rates and market performance.
How we got here
The US economy grew at a slower rate of 1.6% in the first quarter of 2024, below expectations, while inflation accelerated, with the core PCE index rising 3.7%. This combination of slower growth and higher inflation has raised concerns about stagflation, a challenging economic scenario.
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