What does the lower than expected GDP growth numbers (1.6% actual vs 2.5% expected) mean for the Fed/economy? Seeing lots of Jerome Powell memes and I’m a bit lost
In: Economics
Initially, nothing.
This *is* lower than we’ve seen in almost two years, and it’s lower than expected. But it’s also not a *bad* number, historically speaking.
The effects of this from an *economic* standpoint is that it may signal an interest rate cut sooner rather than later. The Fed has been reluctant to cut rates because inflation is still an issue, but with growth slowing that’s less of a problem. It probably still won’t be cut for a while but it’s one of the first major signals that they will.
The effects, politically, are much different. Numbers like this are perfect sound bites and “the economy is slowing down” sounds great in an election year. But that’s politics, not economics.
Nothing much. Media makes everything out to be a “disaster” or “victory”. Economies broadly don’t work like that. Quarterly variations are quite typical (within limits). And quarterly figures are generally subject to revision as the data is subject to changes (companies that assign revenue differently, sales revisions etc).
Of course, the US is super political normally, and hyper political right now. One side wants to triumph success and the other portrays any data as disastrous.
They aim for 2%. Variance is normal, it’s just when those variances become longer term trends is when things become problems.
Latest Answers