US Consumers Keep Spending Despite High Inflation, Rising Interest Rates – By Panos Mourdoukoutas Ph.D. (IB Times) / April 28, 2023
Elevated inflation and rising interest rates are beginning to take their toll on the housing and business sectors of the U.S. economy, but not on the consumer sector, which accounts for nearly two-thirds of the nation’s Gross Domestic Product (GDP).
As a result, consumers have saved the U.S economy from another recession thus far, with real GDP growing at a moderate rate of 1.1% in the first quarter of 2023, according to a preliminary U.S. Bureau of Economic Analysis (BEA) report released on Thursday morning.
It was a significant decline from 2.7% growth in the fourth quarter of 2022 due to a drop in inventories and another contraction in residential fixed investment. They shaved off 2.3 percentage points from the GDP, compared with an additional 1.47 pp in Q4.
The decline in the business inventories and residential fixed investment was mitigated by a growth in consumer spending by 3.7%, up from 1.0% in the fourth quarter of 2023.
