Despite recent trillion-dollar tax cuts and a rising job market, America’s economic growth for Q1 2018 was slower than anticipated.
America’s economy grew at an annual rate of 2.3 percent in 2018’s first quarter, down from growth of 2.9 percent in Q4 2017
That’s according to a Friday (April 27) preliminary report from the US Department of Commerce.
Despite the US$1.5 trillion in tax cuts passed by US congress at the end of 2017, consumer spending fell to a rate of 1.1 percent in Q1, its lowest in almost five years.
Consumer spending came in at 4 percent in Q4 2017; however, it’s worth remembering that Q4 encapsulated both the holiday season and the legislative passing of the aforementioned tax cuts. Both of those events could help account for more eager spending habits.
That said, analysts predict that the country’s strengthening job market combined with the tax cuts will soon leave their mark on the economy.
“This is not too bad,” Carl R. Tannenbaum, chief economist of Northern Trust in Chicago, told the New York Times. “The 2.3 percent figure is moderately encouraging.”
“The rest of 2018 seems well assured given the substantial support that is going to come from government fiscal policy,” Tannenbaum said in reference to the tax cuts.
Even though the first quarter was weaker than anticipated, analysts also predict the US Federal Reserve will likely stay on track with its interest rate hikes to ward off inflation.
“What all this means for the Fed and its rate hike cycle is really nothing,” Peter Boockvar, chief investment officer at Bleakley Advisory Group, wrote in an email obtained by CNN.
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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.