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The US economy is most likely to slow in Q1 as the Federal Reserve raises interest rates

As the Federal Reserve continued its historic campaign of monetary tightening, it is anticipated that the US economy experienced a modest expansion in the first quarter of 2023. A consensus forecast compiled by Bloomberg projects that the world’s largest economy will have grown by 2% annually between January and March. That would represent a slowdown from the 2.6% rate in the last three months of last year.

After Effects of Federal Reserve on US Economy

The data, which will be released by the Commerce Department on Thursday at 8.30 a.m. Eastern Time, are expected to show that the US economy maintained areas of strength despite losing momentum. A drag from net exports and inventories will have been more than offset by strong consumption growth over the three-month period, according to economists.

Furthermore, authorities are ready to convey another quarter-point rate ascend one week from now, which would raise the government supports rate to another objective scope of 5 to 5.25 percent, prior to considering a delay in their rate-increasing effort.

A group of economists at the National Bureau of Economic Research are the official judges of whether the United States is in a recession. One is defined as a “significant decrease in economic activity that occurs across the entire economy and lasts for more than a few months.”

As of Spring, most authorities expect expansion changed Gross domestic product development to ease back to 0.4 percent in 2023, preceding bouncing back to 1.2 percent the next year. The majority of officials predict that the unemployment rate will reach its highest point in 2024, when it will be 4.6%, up from its current level of 3.5%.

Notably, Fed employees have a more pessimistic outlook, predicting that the economy will enter a recession this year before recovering.

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