At 1.6 percent, U.S. economic growth for Q1 2024 was below the 2.2 percent forecast, but U.S. Chamber Chief Economist Curtis Dubay says that number may be deceiving.
In a new economic update, Dubay writes that the underlying economic data “paints a stronger picture than the topline number suggests.” Although total growth did not meet expectations, if the trade and inventory numbers were removed, the economy grew by more than 2.8 percent. Further, consumer spending was up 2.5 percent and business investment rose 5.3 percent for the quarter.
“Growth didn’t meet expectations because there was a surge in imports, and businesses reduced their inventories,” Dubay writes. “Neither of these has as much to do with the underlying fundamentals of the economy as spending and investment.”
Still, Congress and President Joe Biden could be doing more to improve economic conditions. The U.S. Chamber pointed to the need to pass the Tax Relief for American Families Act of 2024, which would retroactively reinstate full expensing for businesses’ capital investments and expand the amount of investment small businesses can immediately write off from $1 million to $1.29 million. The bill passed the House earlier this year but is awaiting action in the Senate.