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GDP data sees inflation rise, dashes dreams of soft landing

Apr 26, 2024 - businessinsider.com
The latest GDP data has shifted expectations for the economy, with a significant drop in growth from last quarter's 3.4% to 1.6% in the first quarter. This, coupled with the rise of the core PCE price index, a favored inflation measurement by the Fed, at a 3.7% annual rate in the first quarter, has led to fears of stagflation. Stagflation, a condition where economic growth slows while inflation and unemployment rise, is difficult to manage and could delay interest rate cuts until as late as 2025.

In other news, Google parent Alphabet's shares surged after a strong first-quarter earnings report, and ghostwriting for executives' LinkedIn profiles is becoming a big business. Meanwhile, AI investments are being made aggressively by tech companies like Meta, but returns on these investments might take a while to realize. This could potentially affect the wider market that has relied on the trend to keep its rally going.

Key takeaways:

  • New data from the Bureau of Economic Analysis shows a significant drop in US real gross domestic product, rising at an annualized rate of 1.6% in the first quarter, down from last quarter's growth of 3.4%.
  • Fears of stagflation, a condition where economic growth slows while inflation and unemployment rise, have started to emerge following the report.
  • Google parent company Alphabet's first-quarter earnings exceeded analysts' expectations, leading to a 12% surge in its stock ahead of Friday's opening bell.
  • LinkedIn profiles of some executives are being managed by PR firms, turning ghostwriting into a booming business.
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