The U.S. Economy Shows Modest Growth in Q1 2023 Amidst Ongoing Challenges
The U.S. economy grew by an annualized 1.1% in the first quarter of 2023, according to the latest GDP report from the Bureau of Economic Analysis. While this increase is modest compared to previous quarters, it’s a positive sign that the U.S. economy remains resilient in the face of higher inflation and a slowing labor market. It was particularly reassuring to see the increase in consumer spending, which is a key driver of economic growth. This suggests that Americans continue to feel confident about the economy.
Although progress has been made on the inflation front with core inflation beginning to slow, there are concerns about the economy’s ability to sustain growth amidst ongoing challenges such as tighter lending standards, a slowing labor market, and supply chain disruptions. Additionally, the Federal Reserve’s cumulative rate hikes are beginning to take a toll on the economy, potentially leading to further strain. The Fed is expected to raise the Federal Funds Rate one final time in May before pausing, which could push the economy perilously close to recession.
Despite these challenges, the construction sector remains a key area of growth for the US economy. While there has been a decline in the pace of projects entering the Dodge Construction Network planning database over the last two months, we remain confident that, construction starts will be flat for the year with declining commercial and residential starts offset by growth in the infrastructure and manufacturing spaces.
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