The Commerce Department released a report stating that the initial estimate for U.S. gross domestic product from January through March was weaker than expected, with growth coming in at 2.4% instead of the anticipated 3.5%. This was due to slowdowns in trade and private inventories, which dragged down the pace of growth compared to the previous quarter’s 4.4%.
While the GDP growth rate fell short of economists’ expectations, Janet Yellen, President Biden’s chief economist and former Federal Reserve chair, remained optimistic about the overall performance of the U.S. economy. In fact, she highlighted that despite challenges identified in the report, there were still positive signs indicating that the economy continued to perform well.
However, inflation became a major concern for Yellen as she pointed out that personal consumption expenditures price index excluding food and energy rose at an annual rate of 3.7%, much higher than the previous quarter’s 2%. Despite this surge in inflation, Yellen indicated that it did not necessarily call for an increase in unemployment or cooling measures in other areas of the economy to bring inflation back to the Federal Reserve’s target of 2%.
In summary, while there are ongoing challenges facing the U.S. economy, including trade and private inventory dragging down GDP growth and rising inflation rates, Janet Yellen remains optimistic about its overall performance and believes that drastic measures are not necessary to maintain stability in response to these challenges.
