NEW YORK, May 28 (Reuters) – Estimated U.S. economic growth for the first quarter was revised lower on Thursday and a closely watched measure of price pressures came in largely in line with expectations. U.S. markets opened \u200cslightly lower.<\/p>\n
Gross domestic product increased at a 1.6% annualized rate last quarter, the Commerce Department’s Bureau of Economic \u200cAnalysis said in its second estimate of first-quarter GDP on Thursday. Growth was previously reported to have advanced at a 2.0% pace. Economists polled by Reuters had \u200bexpected that GDP growth would be unrevised at a 2.0% rate. The downgrade to the first-quarter GDP estimate reflected downward revisions to inventory investment and consumer spending.<\/p>\n
Meanwhile the personal consumption expenditures price index jumped 3.8% in the 12 months through April, the largest rise since May 2023, the Commerce Department’s Bureau of Economic Analysis said on Thursday. PCE inflation advanced by an unrevised 3.5% in March.<\/p>\n
Economists polled by Reuters had forecast PCE \u200cinflation increasing 3.8% year-on-year. The PCE price index rose \u20600.4% month-on-month in April after shooting up 0.7% in March.<\/p>\n
Excluding the volatile food and energy components, the PCE price index increased 3.3% year-on-year in April after rising 3.2% in March. The so-called core PCE inflation gained 0.2% \u2060in a monthly basis after advancing 0.3% in March.<\/p>\n
MARKET REACTION:<\/p>\n
STOCKS: Indexes were slightly lower on Thursday morning following the data, with the S&P 500 down 0.1% and the Nasdaq composite off 0.3%.<\/p>\n
BONDS: Treasury yields were mostly unchanged. The 2-year yield was at 4.04% and the 10-year \u200byield was \u200bat 4.48%.<\/p>\n
FOREX: The dollar index was a bit lower, off 0.1% \u200bat 99.16.<\/p>\n
COMMENTS:<\/p>\n
PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL SECURITIES, \u200cNEW YORK:<\/p>\n
\u201cThe two key numbers here are inflation on a yearly basis, and of course, economic growth, GDP, which was revised downward. What the numbers point to today is simply that we have a stagflation problem.<\/p>\n
\u201cAnd that’s a big problem for the Fed. We have growth that’s not that strong and rising inflation. And that suggests that a Fed hike is getting closer to reality as opposed to a rate cut.\u201d<\/p>\n
ANGELO KOURKAFAS, SENIOR GLOBAL INVESTMENT STRATEGIST, EDWARD JONES, ST. LOUIS, MISSOURI:<\/p>\n
“I don’t think the data changed \u200cthe narrative. The [PCE] number was not as bad as feared. It pushes \u200bback a little bit against some expectations for rate hikes.<\/p>\n
“At the end of \u200bthe day, though, we know that’s backward looking, and \u200ba lot of the focus is on the negotiations or lack thereof, the achievement of a \u200cpeace deal. So, oil prices are still moving inflation \u200bexpectations around. We do have a \u200bsituation where consumers continue to spend. There is also a lot of intense AI spending, and that’s part of the inflation story.”<\/p>\n
JOEL KRUGER, MARKET STRATEGIST, LMAX GROUP, LONDON:<\/p>\n
\u201cSofter core inflation readings and weaker headline growth data are helping fuel \u200ba risk-on reaction, with markets taking comfort \u200cin signs that underlying price pressures may be easing without a meaningful deterioration in the labor market, helping \u200bto take some pressure off the Fed and support expectations for a less restrictive policy outlook.\u201d<\/p>\n
(Reporting by Lucia \u200bMutikani, Utkarsh Hathi, Laura Matthews, Stephen Culp; editing by Colin Barr)<\/p>\n","protected":false},"excerpt":{"rendered":"NEW YORK, May 28 (Reuters) – Estimated U.S. economic growth for the first quarter was revised lower on…\n","protected":false},"author":3,"featured_media":827981,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[12],"tags":[64,4052,79,27223,135484,97517,289294,67,132,68],"class_list":["post-827980","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economic-growth","tag-economy","tag-expectations","tag-pce-price-index","tag-personal-consumption-expenditures-price-index","tag-price-pressures","tag-united-states","tag-unitedstates","tag-us"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/116652768620220442","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/827980","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=827980"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/827980\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/827981"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=827980"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=827980"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=827980"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}