The U.S. economy defied expectations and posted a strong growth rate of 2% in the first quarter of 2023, according to the final estimate released by the Commerce Department on Thursday. This was a significant upward revision from the previous estimate of 1.3% and also higher than the consensus forecast of 1.4%.

The robust performance of the economy in the first three months of the year was driven by a surge in consumer spending and exports, which were both revised higher than previously reported. Consumer spending, which accounts for about two-thirds of the U.S. economy, jumped 4.2%, the fastest pace since the second quarter of 2021. Exports, which contribute to net trade, soared 7.8%, reversing a 3.7% decline in the fourth quarter of 2022.

The final estimate also brought some relief on the inflation front, as the core personal consumption expenditures (PCE) price index, which excludes food and energy and is closely watched by the Federal Reserve, was revised down slightly to 4.9% from 5%. The overall PCE price index remained unchanged at 3.8%. The strong growth in the first quarter contrasted with the widespread fears of a looming recession, as the economy faced headwinds from rising interest rates, trade tensions, and a partial government shutdown.

The Federal Reserve has been raising rates to keep inflation under control, targeting a 2% level. The Fed has also been concerned about the tight labor market, which has pushed up wages but not enough to keep up with inflation. The Labor Department reported on Thursday that initial jobless claims fell to 239,000 in the week ended June 24, beating expectations of 264,000. The final estimate for Q1 GDP was the last major economic data before President Biden hosts Prime Minister Modi of India for a state dinner at the White House on Thursday.

—

#mindvoice #mindvoicenews #currentaffairs #currentnews #latestnews #ipsc #iaspreparation #UPSC #useconomy #gdp #growth #consumerspending #exports #inflation #pce #fed #interestrates #joblessclaims #biden #modi