Racks sit devoid of product in a Target store Tuesday, March 15, 2022, in Sheridan, Colo. The U.S. economy ended 2021 by expanding at a healthy 6.9% annual pace from October through December, the government reported Wednesday, March 30, a slight downgrade from its previous estimates. For the January-March quarter of this year, the biggest drag will be a sharp reduction in the amount of goods businesses restock on their shelves and warehouses. – The U.S.
Looking ahead, however, growth is likely to slow sharply this year, particularly in the first three months 2022. Higher inflation will likely weigh on consumer spending as Americans take a dimmer view of the economy. Home sales have fallen as the Federal Reserve has started pushing up borrowing costs, leading to a sharp increase in mortgage rates. Exports may weaken as overseas economies are disrupted by Russia's invasion of Ukraine.
Economists forecast that growth could fall to as low as 0.5% in the first three months of the year and may even slip into negative territory. The figures are adjusted for inflation, which has spiked to four-decade highs. Consumer spending rose 2.5% in the fourth quarter, down from the previous estimate of 3.1%. Economists expect spending to remain healthy in the first quarter, even as overall growth slows.
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