U.S. growth is expected to slow significantly in the first quarter of this year as the Federal Reserve (Fed) heads toward tightening its monetary policy.
Preliminary US Gross Domestic Product (GDP) estimates for the first quarter to be released in the New York session are projected to increase 1.1% from 6.9% recorded in the final quarter of 2021.
Analysts see the forthcoming report could also lead to warnings of stagflation and recession from some sectors.
However, the low growth figures do not give a true picture of the economy as other data such as average working hours and industrial production showed sustained growth in the last quarter.
The surge in trade deficit driven by strong imports is expected to be a reducing factor in growth. However, it is also an indication that domestic demand is strong.
In addition, the wave of Omicron variants has eroded confidence and economic activity to the point of hurting consumer spending earlier this year.
While US growth in the first quarter is forecast to slow, it may be able to maintain sufficient fundamental strength to keep its growth on track amid pressure from soaring inflation and rising interest rates.
The US dollar is currently at its strongest level in five years against most major currencies after touching 103.69 at the opening of the European session.
