Real US Gross Domestic Product (GDP) grew at an annualized rate of 1.1 percent in the first quarter of 2023, coming in within the lower half of estimates that ranged from 0.4 to 3.5 percent on Bloomberg. This is a decline from the 2.6 percent that the US economy grew in the 4th quarter of 2022. The reading, which will go through two more iterations of revision, clearly indicates that US economic growth is rapidly decelerating.

Additionally, releases of two inflation indicators showed higher-than-estimated price increases in the first quarter. The personal consumption expenditures price index grew at a 4.2 percent annualized pace between January and March 2023. Excluding food and energy, it rose 4.9 percent, the quickest in a year and higher than forecasted.

The term stagflation describes economic environments experiencing high inflation, contracting economic growth, and high unemployment simultaneously. The current US economic environment could be categorized as stagflation lite, demonstrating as it does relatively resilient employment at present amid persistently high price levels and weakening growth.

Real US GDP chained quarterly (2018 – present)