Of course these numbers are still impressive compared to America’s counterparts.
The International Monetary Fund’s latest World Economic Outlook report, published earlier this month, still forecasts America to have the best growth among major advanced economies this year – by some margin. The runner-up is expected to be Canada, growing by 1.2pc compared to America’s 2.7pc.
This is the stuff of dreams for the eurozone – which is looking at less than 1pc growth – and the UK, which is predicted to get 0.5pc growth (even the Office for Budget Responsibility’s slightly more optimistic scenario is for a measly 0.8pc).
But now that growth is slowing, many Americans will think their fears have been realised.
The accusations that it was all in their head – or a “vibe-cession” in which economic prosperity is measured not in numbers, but by feelings – was all wrong.
There were reasons to be concerned – and economic growth isn’t the only factor.
We have also learned that inflation in America accelerated to 3.4pc in the first quarter of 2024, up from 1.8pc in the last quarter of 2023. This moves the Federal Reserve further away from its 2pc target, which it has not yet reached.
Indeed, the Biden administration’s language on inflation has contributed to American sceptisim around the economy. The President’s insistence that prices are coming down – “you know from turkey to air travel to a tank of gas,” he boasted last year, “costs went down and went down” – has not aligned with many Americans’ experience of the crisis. Prices, of course, have continued to rise, albeit at a slower rate.
But it’s the Fed’s nerves that need to be most closely monitored. The Dow Jones closed 1pc down on Thursday, as markets reacted to the inflation rise, triggering more scepticism over when – and how quickly – interest rates will now be cut.
The assumption has been that the Federal Reserve would start its rate-cutting process this year – paving the way for the Bank of England and other central banks to follow suit.
But a rise in inflation could bolster the hawkish instincts of already-cautious policymakers: having called the inflation crisis badly wrong, they are now determined to correct for past mistakes.
This has weighed down the UK’s economy, as beating price increases with higher rates has been prioritised over kickstarting the economy (it’s difficult to do both at the same time, as the higher rates needed to tackle inflation are designed to cool the economy). It seems, now, that similar pressures are weighing on America.
Markets are not as convinced about rate cuts as they were at the start of the year: something is expected in both the US and the UK, but it’s not likely to be as aggressive as once predicted. This is bad news for incumbent governments, and good news for their opponents.
In Britain, Labour may well inherit an economy that has the potential to take off when rates start to come down. In the States, where the economy decides the presidential election, this is all very good news for Donald Trump (who needs it, as all eyes are on his first criminal court case, currently underway).