The US economy performed poorly in the first quarter of 2025:
🔹️The economy contracted by 0.3%. (Expectation was 0.4% growth, previous quarter was 2.4% growth.)
🔹️Sales decreased by 2.5%. (Previous quarter had increased by 3.3%.)
🔹️Consumer spending only increased by 1.8%. (Previous quarter had increased by 4%.)
🔹️Non-wage employment in the business sector only increased by 62,000 people. (Expectation was 108,000, previous month was 155,000.)
⚠️But prices continued to rise:
🔹️The GDP price index rose to 3.7%. (This means the inflation effect is high.)
🔹️The core PCE inflation, which the Fed pays the most attention to, was 3.5%.
🔹️Overall PCE inflation rose to 3.6%.
In summary: While the economy is contracting, inflation is rising. This may signal "stagflation." The Fed's job has become much harder.
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