US economic growth slows in Q1 as businesses liquidate inventories

According to the Commerce Department's advance estimate of first-quarter GDP growth, US economic growth slowed more than anticipated, mainly due to businesses liquidating inventories in preparation for weaker demand later this year due to higher borrowing costs.
28.04.2023 05:45:06 / English News

However, the decline in private inventories, the first in a year and a half, is potentially good news for the economy as it faces a possible recession by the end of the year.

Experts believe that this may suggest that businesses are closer to getting rid of unsold stock, putting them in a better position to rebuild inventory if needed.

The GDP increased at an annualized rate of 1.1% in the first quarter, compared to 2.6% in the previous quarter.

The drawdown in inventories, mainly by wholesalers and manufacturers, was the first since Q3 2021, and it appears to be both planned and the result of increased consumer spending.

Business spending on equipment was down for the second consecutive quarter, while overall business investment was sluggish, likely due to narrower profit margins. (ILKHA)