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    U.S. Economy Grew at 1.6% Rate in First-Quarter Slowdown

    Gross domestic product, adjusted for inflation, increased at a 1.6 percent annual rate in the first three months of the year.The U.S. economy remained resilient early this year, with a strong job market fueling robust consumer spending. The trouble is that inflation was resilient, too.Gross domestic product, adjusted for inflation, increased at a 1.6 percent annual rate in the first three months of the year, the Commerce Department said on Thursday. That was down sharply from the 3.4 percent growth rate at the end of 2023 and fell well short of forecasters’ expectations.Economists were largely unconcerned by the slowdown, which stemmed mostly from big shifts in business inventories and international trade, components that often swing wildly from one quarter to the next. Measures of underlying demand were significantly stronger, offering no hint of the recession that forecasters spent much of last year warning was on the way.“It would suggest some moderation in growth but still a solid economy,” said Michael Gapen, chief U.S. economist at Bank of America. He said the report contained “few signs of weakness overall.”But the solid growth figures were accompanied by an unexpectedly rapid acceleration in inflation. Consumer prices rose at a 3.4 percent annual rate in the first quarter, up from 1.8 percent in the final quarter of last year. Excluding the volatile food and energy categories, prices rose at a 3.7 percent annual rate.Taken together, the first-quarter data was the latest evidence that the Federal Reserve’s efforts to tame inflation have stalled — and that the celebration in financial markets over an apparent “soft landing” or gentle slowdown for the economy had been premature.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Why Better Times (and Big Raises) Haven’t Cured the Inflation Hangover

    Frustrated by higher prices, many Pennsylvanians with fresh pay raises and solid finances report a sense of insecurity lingering from the pandemic.A disconnect between economic data and consumer sentiment is being felt by Pennsylvania residents, including, from left, Donald Woods, a retired firefighter in West Philadelphia; Darren Mattern, a nurse in Altoona; and Lindsay Danella, a server in Altoona.Left: Caroline Gutman for The New York Times. Center and right: Ross Mantle for The New York TimesIn western Pennsylvania, halfway through one of those classic hazy March days when the worst of winter has passed, but the bare trees tilting in the wind tell everyone spring is yet to come, Darren Mattern was putting in some extra work.Tucked at a corner table inside a Barnes & Noble cafe in Logan Town Centre, a sprawling exurban shopping complex in Blair County, he tapped away at two laptops. His work PC was open with notes on his clients: local seniors in need of at-home health care and living assistance, whom he serves as a registered nurse. On his sleeker, personal laptop he eyed some coursework for the master’s degree in nursing he’s finishing so he can work as a supervisor soon.Mr. Mattern, warm and steady in demeanor, says the “huge blessing” of things evident in his everyday life at 35 — financial security, a home purchase last year, a baby on the way — weren’t possible until recently.He had warehouse jobs for most of his 20s, making a few dollars above minimum wage (in a state where that’s still $7.25 an hour), until he took nursing classes in the late 2010s. Shortly after becoming certified, he pushed through long days in a hospital during the height of the Covid pandemic at a salary of $40,000. Today, he has what he calls “the best nursing job pay-wise I’ve ever had,” at $85,000.Mr. Mattern’s trajectory is one bright line in a broad upward trend that hundreds of thousands of Pennsylvanians, and millions of other Americans, have experienced since the pandemic recession — a comeback in which unemployment has been below 4 percent for the longest stretch since the 1960s, small-business creation has flourished and the stock market has reached new heights.There’s a disconnect, however, between the raw data and a national mood that is somewhat improved but still sour. A surge in average weekly pay and full-time employment has helped offset the demoralizing effects of a two-year bout of heavy inflation as the global economy chaotically reopened. But it has not neutralized them.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Consumers Hate ‘Price Discrimination,’ but They Sure Love a Discount

    The Wendy’s debacle is a warning shot for brands: If you want to play with prices, make sure to communicate why and whom it could help.It’s been a strange and maddening couple of years for consumers, with prices of essential goods soaring and then sinking, turning household budgets upside down.Listen to this article with reporter commentaryOpen this article in the New York Times Audio app on iOS.Perhaps that’s why, in late February, the internet revolted over Wendy’s plan to test changing its menu prices across the day. If the Breakfast Baconator winds up costing $6.99 at 7 a.m. and $7.99 three hours later, what in life can you really count on anymore?The company later issued a statement saying it would not raise prices during busy parts of the day, but rather add discounts during slower hours. Nevertheless, the episode won’t stop the continued spread of so-called dynamic pricing, which describes an approach of setting prices in response to shifting patterns of demand and supply. It might not even stop the growth of “personalized pricing,” which targets individuals based on their personal willingness to pay.And in many circumstances, customers may come around — if they feel companies are being forthright about how they’re changing prices and what information they’re using to do it.“There’s a need for some transparency, and it has to make sense to consumers,” said Craig Zawada, a pricing expert with PROS, a consultancy that helped pioneer dynamic pricing by airlines in the 1980s and now works across dozens of other industries. “In general, from a buyer standpoint, there has to be this perception of fairness.”We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Brighter Economic Mood Isn’t Translating Into Support for Biden

    Voters feel slightly better about the economy as inflation recedes, but partisan divides remain deep, a Times/Siena poll found.Eight months before the election, Americans feel slightly better about the state of the economy as inflation recedes and the labor market remains stable, but President Biden doesn’t appear to be benefiting.Among registered voters nationwide, 26 percent believe the economy is good or excellent, according to polling in late February by The New York Times and Siena College. That share is up six percentage points since July. The movement occurred disproportionately among older Democrats, a constituency already likely to vote for Mr. Biden.And the share of voters saying they approve of the job Mr. Biden is doing in office has actually fallen, to 36 percent in the latest poll, from 39 percent in July.Inflation has pervaded economic sentiment since mid-2022, confronting voters daily with the price of everything from eggs to car insurance. Even as inflation has been falling since mid-2023 — and wage growth has lately outpaced the rate of price increases, at least on average — many Americans don’t yet see the problem as solved. Nearly two-thirds of registered voters in the Times/Siena poll rated the price of food and consumer goods as poor.Mr. Biden’s team has pointed to an array of indications that the economy has rebounded remarkably well since he assumed office, including an unemployment rate that has been under 4 percent for two years and a stock market that has set record after record.But in a persistent trend that has confounded pollsters and economists, those fundamentals largely haven’t been reflected in surveys. Forty percent of those surveyed said the economy was worse than it was a year earlier, compared with 23 percent who thought it was better — even though a narrow majority rated their personal financial situation as good or excellent.

    Source: New York Times/Siena College poll of 980 registered voters conducted Feb. 25 to 28, 2024By Christine Zhang

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    How would you rate each of the following aspects of the economy today?
    Source: New York Times/Siena College poll of 980 registered voters conducted Feb. 25 to 28, 2024By Christine ZhangWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Will Food Prices Stop Rising Quickly? Many Companies Say Yes.

    Food companies are talking about smaller price increases this year, good news for grocery shoppers, restaurant diners and the White House.Few prices are as visible to Americans as the ones they encounter at the grocery store or drive-through window, which is why two years of rapid food inflation have been a major drag for U.S. households and the Biden administration.Shoppers have only slowly regained confidence in the state of the economy as they pay more to fill up their carts, and President Biden has made a habit of shaming food companies — even filming a Super Bowl Sunday video criticizing snack producers for their “rip off” prices.But now, the trend in grocery and restaurant inflation appears to be on the cusp of changing.After months of rapid increase, the cost of food at home climbed at a notably slower clip in January. And from packaged food providers to restaurant chains, companies across the food business are reporting that they are no longer raising prices as steeply. In some cases that’s because consumers are finally pushing back against price increases after years of spending through them. In others, it’s because the prices that companies pay for inputs like packaging and labor are no longer rising as sharply.

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    Year-over-year change in consumer price indexes
    Source: Bureau of Labor StatisticsBy The New York TimesEven if food inflation cools, it does not mean that your grocery bill or restaurant check will get smaller: It just means it will stop climbing so quickly. Most companies are planning smaller price increases rather than outright price cuts. Still, when it comes to the question of whether rapid jumps in grocery and restaurant prices are behind us, what executives are telling investors offer some reason for hope.Some, but not all, consumers are saying no.Executives have found in recent months that they can raise prices only so high before consumers cut back.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Biden Takes Aim at Grocery Chains Over Food Prices

    President Biden has begun to accuse stores of overcharging shoppers, as food costs remain a burden for consumers and a political problem for the president.President Biden, whose approval rating has suffered amid high inflation, is beginning to pressure large grocery chains to slash food prices for American consumers, accusing the stores of reaping excess profits and ripping off shoppers.“There are still too many corporations in America ripping people off: price gouging, junk fees, greedflation, shrinkflation,” Mr. Biden said last week in South Carolina. Aides say those comments are a preview of more pressure to come against grocery chains and other companies that are maintaining higher-than-usual profit margins after a period of rapid price growth.Mr. Biden’s public offensive reflects the political reality that, while inflation is moderating, voters are angry about how much they are paying at the grocery store and that is weighing on Mr. Biden’s approval rating ahead of the 2024 election.Economic research suggests the cost of eggs, milk and other staples — which consumers buy far more frequently than big-ticket items like furniture or electronics — play an outsized role in shaping Americans’ views of inflation. Those prices jumped by more than 11 percent in 2022 and by 5 percent last year, amid a post-pandemic inflation surge that was the nation’s fastest burst of price increases in four decades.The rate of increase is slowing rapidly: In December, prices for food consumed at home were up by just over 1 percent, according to the Labor Department. But administration officials say Mr. Biden is keenly aware that prices remain too elevated for many families, even as key items, like gasoline and household furnishings, are now cheaper than they were at their post-pandemic peak.And yet, there is a general belief across administration officials and their allies that there is little else Mr. Biden could do unilaterally to force grocery prices down quickly.Grocery store margins are rising

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    Operating profit margin by type of retailer
    Notes: Operating margin defined as sales, receipts and operating revenue as a share of operating expenses. Data shown as four-quarter rolling average.Source: Council of Economic AdvisersBy The New York TimesWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Global Economy Is Heading Toward ‘Soft Landing,’ I.M.F. Says

    The International Monetary Fund upgraded its growth forecasts and offered a more optimistic outlook for the world economy.The global economy has been battered by a pandemic, record levels of inflation, protracted wars and skyrocketing interest rates over the past four years, raising fears of a painful worldwide downturn. But fresh forecasts published on Tuesday suggest that the world has managed to defy the odds, averting the threat of a so-called hard landing.Projections from the International Monetary Fund painted a picture of economic durability — one that policymakers have been hoping to achieve while trying to manage a series of cascading crises.In its latest economic outlook, the I.M.F. projected global growth of 3.1 percent this year — the same pace as in 2023 and an upgrade from its previous forecast of 2.9 percent. Predictions of a global recession have receded, with inflation easing faster than economists anticipated. Central bankers, including the Federal Reserve, are expected to begin cutting interest rates in the coming months.“The global economy has shown remarkable resilience, and we are now in the final descent to a soft landing,” said Pierre-Olivier Gourinchas, the chief economist of the I.M.F.Policymakers who feared they would need to hit the brakes on economic growth to contain rising prices have managed to tame inflation without tipping the world into a recession. The I.M.F. expects global inflation to fall to 5.8 percent this year and 4.4 percent in 2025 from 6.8 percent in 2023. It estimates that 80 percent of the world’s economies will experience lower annual inflation this year.The brighter outlook is due largely to the strength of the U.S. economy, which grew 3.1 percent last year. That robust growth came despite the Fed’s aggressive series of rate increases, which raised borrowing costs to their highest levels in 22 years. Consumer spending in America has held strong while businesses have continued to invest. The I.M.F. now expects the U.S. economy to grow 2.1 percent this year, up from its previous prediction of 1.5 percent.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber?  More

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    Why Cut Rates in an Economy This Strong? A Big Question Confronts the Fed.

    The central bank is widely expected to lower interest rates this year. But with growth and consumer spending chugging along, explaining it may take some work.The Federal Reserve is widely expected to leave interest rates unchanged at the conclusion of its meeting on Wednesday, but investors will be watching closely for any hint at when and how much it might lower those rates this year.The expected rate cuts raise a big question: Why would central bankers lower borrowing costs when the economy is experiencing surprisingly strong growth?The United States’ economy grew 3.1 percent last year, up from less than 1 percent in 2022 and faster than the average for the five years leading up to the pandemic. Consumer spending in December came in faster than expected. And while hiring has slowed, America still boasts an unemployment rate of just 3.7 percent — a historically low level.The data suggest that even though the Fed has raised interest rates to a range of 5.25 to 5.5 percent, the highest level in more than two decades, the increase has not been enough to slam the brakes on the economy. In fact, growth remains faster than the pace that many forecasters think is sustainable in the longer run.Fed officials themselves projected in December that they would make three rate cuts this year as inflation steadily cooled. Yet lowering interest rates against such a robust backdrop could take some explaining. Typically, the Fed tries to keep the economy running at an even keel: lowering rates to stoke borrowing and spending and speed things up when growth is weak, and raising them to cool growth down to make sure that demand does not overheat and push inflation higher.The economic resilience has caused Wall Street investors to suspect that central bankers may wait longer to cut rates — they were previously betting heavily on a move down in March, but now see the odds as only 50-50. But, some economists said, there could be good reasons for the Fed to lower borrowing costs even if the economy continues chugging along.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber?  More