Arab Press

بالشعب و للشعب
Saturday, Feb 22, 2025

US recession fears grow as economy slows sharply in first quarter

US recession fears grow as economy slows sharply in first quarter

Growth eases by far more than expected between January and March to the extent financial markets and many economists now believe recession is inevitable.

The world's largest economy slowed sharply in the first quarter of the year, according to the first official estimate which has raised fears of recession ahead.

Growth was measured at an annualised rate of 1.1% between January and March, the Commerce Department said.

Economists had been expecting a figure of 2%.

The slump followed growth of 2.6%, by the same measure, during the final three months of 2023.

The growth was mainly explained by consumer spending holding up, probably due to a low unemployment rate, as the aggressive pace of interest rate rises to tame inflation hit other areas, such as the housing market, harder.

The data also pointed to a big reduction in business inventories - behaviour that is typically seen in anticipation of an economic downturn.

Economists are split on the prospect of recession being declared.

The definition of a technical recession across most of the world is two consecutive quarters of negative growth.

The Federal Reserve has raised its main interest rate to a range of 4.75%-5% and is expected to hike again next month


By that measure, the US economy would have been in recession during the first half of last year.

But the country defines such a contraction differently. It is determined by a committee of experts.

The US economy's low jobless rate largely prevented a recession being declared last year but conditions are darkening for 2023.

Many economists say the cumulative impact of the Fed Reserve's rate hikes has yet to be fully felt while the pace of hiring is slowing.

Many banks, which are charging higher interest rates as a result, have also muddied the waters due to a tightening of lending standards since the failure last month of two major banks - Silicon Valley Bank and Signature Bank.

There are signs the crisis of confidence is not over yet as First Republic, a major regional lender, has seen a fresh run on its share price this week taking it to fresh lows.

It was effectively rescued last month by a $30bn cash injection from 11 major peers and revealed on Tuesday that $100bn had been withdrawn by depositors during the frenzy to grip the sector.

It has been reported that the federal government is unwilling to engineer a rescue.

Another political challenge is also gaining traction.

The Republican-dominated House of Representatives has moved to pressure President Biden over a looming debt ceiling deadline by voting to raise the limit only in exchange for big spending cuts.

A default would plunge the US economy into chaos so it forces Mr Biden to negotiate with his political opponents.

Brian Klimke, investment director at Cetera Investment Management, said of the economic growth figures: "January was really the standout month and since then we've seen weakness in February and March, which has really been slowly dragging down the economy.

"If we're looking to the future, data does seem to be continuing to weaken.

"The good news is we do think a recession could be mild."

Newsletter

Related Articles

Arab Press
0:00
0:00
Close
The negotiation teams of Trump and Putin meet directly, establishing the groundwork for a significant advance.
Israeli Minister Urges Hamas to Surrender and Depart from Gaza.
Iran Considers Moving Its Capital Due to Urban Difficulties
Israel and Hamas Finalize Sixth Exchange of Hostages and Prisoners During Continuing Gaza Ceasefire
Leaders of BRICS to Gather in Rio de Janeiro for July Summit
Muhsin Hendricks, a trailblazing openly gay imam, was killed in South Africa.
Trump's special envoy for hostage affairs cautions Hamas against challenging Trump before Saturday's deadline.
Two British citizens apprehended in Iran amid escalating tensions.
Israel Issues Threat of Military Action as Hostage Negotiations with Hamas Continue
Hamas Coordinates Worldwide Solidarity Marches in Reaction to U.S. and Israeli Initiative
Israel Warns of Ending Gaza Ceasefire Due to Hostage Situation
King Abdullah II Dismisses US Proposal to Relocate Palestinians, Commits to Welcoming Gaza Children.
Lebanon Installs New Government with Hezbollah's Impact on Key Ministries
Report: Iran Attempted to Assassinate Trump During Election Campaign
U.S. Authorizes $7.4 Billion Arms Sale to Israel
Iran's Supreme Leader Rejects Nuclear Negotiations with the U.S.
UN Chief Denounces Trump's Gaza Plan, Cautions Against Ethnic Cleansing
Pressure Intensifies for a Free Trade Agreement between the UK and GCC in Light of Economic Difficulties
Israel to Withdraw from UN Human Rights Council Due to Accusations of Anti-Semitism
EU Reaffirms Gaza's Essential Role in Future Palestinian State Following Trump's Proposal
Iranian Currency Reaches All-Time Low Amid US 'Maximum Pressure' Initiative.
UN Reaffirms Ban on Deportation from Occupied Territories Amid US Gaza Proposal
Palestinians Fear Repeat of 'Nakba' Amid Ongoing Crisis in Gaza
UAE Aids in the Exchange of 300 Prisoners Between Russia and Ukraine
Egypt Seeks Global Backing for Two-State Solution Following US Proposal for Gaza Plan
Trump's Suggestion to 'Seize Control' of Gaza Represents a Significant Shift in US Policy
French President is the first EU leader to extend congratulations to the new Syrian President.
Tunisian President Appoints New Finance Minister Amid Economic Crisis
Trump Suggests U.S. 'Takeover' of Gaza, Prompting Global Worries
Trump's Proposal for Gaza Provokes Global Debate
President Trump Suggests Moving Gaza's Palestinian Population
Aga Khan IV, Spiritual Leader and Philanthropist, Dies at 88
Erdogan and Syria's Sharaa Talk About Collaboration to Counter Kurdish Militants
Trump Suggests U.S. Control of Gaza Strip Amid Ongoing Conflict
Trump Resumes 'Maximum Pressure' Strategy to Limit Iran's Oil Exports.
Ex-British Soldier Sentenced for Espionage on Behalf of Iran and Fleeing from Prison
Gazans in Egypt Reject Displacement, Struggle with Return to War-Torn Home
Queen Rania Urges Protection of Children’s Rights at Vatican Summit
Hamas Officials Ready to Begin Negotiations for Phase Two of Gaza Truce
Trump Expresses Caution Over Gaza Ceasefire as Netanyahu Visits Washington
Oman to Host 18th Indian Ocean Conference on Maritime Security and Trade
Emir of Kuwait Meets BlackRock CEO for Talks on Investment Opportunities
Queen Rania of Jordan Calls for Global Action on Children’s Rights at Vatican Summit
Egyptian President El-Sisi Invited for White House Meeting Following Jordanian King’s Visit
Queen Rania Calls for Protection of Children’s Rights at Vatican Summit
Israeli Military Operations Continue on Lebanon Border Amid Ceasefire Tensions
Israeli Hostage's Release Highlights Uncertainty Over Family's Fate
Israeli Military Operations Escalate in Southern Lebanon Amid Hezbollah Tensions
Zayed Award for Human Fraternity Announces 2025 Honorees
Kuwait Anticipates a 12% Increase in Budget Deficit for the 2025-2026 Fiscal Year
×