The U.S. economy grew at an annualized rate of just 1.2% in the first quarter of 2025, significantly below analysts’ expectations of around 2.5%, according to data released by the Commerce Department today.
A sharp slowdown in consumer spending, weak business investment, and the lingering effects of high interest rates contributed to the disappointing figure. Economists note that persistent inflationary pressures have eroded household purchasing power, while companies have scaled back expansion plans amid uncertainty over future Federal Reserve policy.
Despite a booming stock market driven by artificial intelligence and tech-sector optimism, the broader economy remains under strain. Housing starts declined by 7%, and credit card debt has reached an all-time high of $1.5 trillion, raising concerns about financial stability.
Federal Reserve Chair Jerome Powell is expected to address the slowdown during his policy speech next week. Market speculation has intensified over the possibility of interest rate cuts later in 2025, which could provide some relief to the economy.
Meanwhile, the Biden administration faces political pressure to reassure voters ahead of the 2026 midterm elections, where economic management is expected to be a central issue.
Leave a Reply