Blitz Bureau
The Government sharply revised down its estimate of first-quarter growth, as a surge in imports ahead of President Donald Trump’s import tariffs and weaker consumer spending and a decrease in federal outlays led to a 0.5 per cent contraction in the economy, reported usnews.com. The report on gross domestic product was worse than economists had forecast.
“Thursday’s GDP print solidifies the idea that the economy contracted during the first quarter, not because economic fundamentals are deteriorating, but because businesses stockpiled imports to get ahead of the early April Liberation Day tariffs, and that is a drag on GDP,” said Paul Stanley, chief investment officer at Granite Bay Wealth Management. “We expect the economy to avoid a recession, as GDP is likely to rebound in the second quarter,” he added
Home sales increase/h6> Separately, the National Association of Realtors said that sales of pending homes surprisingly increased by 1.8 per cent in May compared to expectations for a flat reading.
The Federal Reserve Chairman said he still does not know how much of an impact President Donald Trump’s tariffs will have on inflation and the economy. “Consistent job gains and rising wages are modestly helping the housing market, with hourly wages increasing faster than home prices,” said Lawrence Yun, chief economist at the NAR.
“However, mortgage rate fluctuations are the primary driver of homebuying decisions and impact housing affordability more than wage gains,” he said. The report follows one from the Commerce Department that found new home sales fell 13.7 per cent in May as inventories of homes for sale increased. The year-over-year drop was 6.3 per cent.
“Stuck in a bit of a rut, the housing market continues to suffer from high home prices and elevated mortgage rates,” said Hannah Jones, senior economic research analyst at Realtor.com.
Attack on Fed chief
“As a result, nearly every large US metro is unaffordable to median-earning households. Only Pittsburgh, St. Louis and Detroit were affordable to households earning the local median wage in May,” he said.
Meanwhile, President Donald Trump resumed his attacks on Federal Reserve Chairman Jerome Powell, telling reporters he has three or four names in mind as his replacement. Powell’s term as chairman ends in 2026.
“I know within three or four people who I’m going to pick,” Trump said during a press conference following the NATO summit in Holland. “I mean, he goes out pretty soon, fortunately, because I think he’s terrible.” Powell appeared before the Senate Banking Committee and reiterated his stance of holding interest rates steady until the central bank sees more clarity on whether Trump’s import tariffs are driving inflation higher.
