The US economy grew more slowly than initially thought during the first quarter.
The Bureau of Economic Analysis’s second estimate of first quarter US gross domestic product (GDP) showed the economy grew at an annualized pace of 1.3% during the period, down from a first reading in April of 1.6% growth and in line with economist estimates.
The update to the first quarter growth metric “primarily reflected a downward revision to consumer spending,” per the BEA. Personal consumption in the first quarter grew at 2%, down from a prior reading of 2.5%.
The reading came in significantly lower than fourth quarter GDP, which was revised up to 3.4%.
“The weaker headline growth statistic looks discouraging, but it belies solid underlying momentum as the economy’s core — private domestic sales to domestic purchasers — showed a healthy expansion of 2.5% annualized,” Nationwide financial markets economist Oren Klachkin wrote of this morning’s release of Q1 GDP revision data.
The slowdown in headline GDP comes at a time when markets have been sensitive to any readings indicating that the economy may be running too hot for the Federal Reserve’s liking, as inflation has proved stickier than expected. The concern is red-hot growth would boost price increases.
Read more: How does the labor market affect inflation?
Many forecasters don’t see the first quarter economic growth slowdown as the start of a broader trend. Prior to Thursday’s reading, Goldman Sachs expected 3.2% annualized growth in the second quarter. Meanwhile, the Atlanta Fed’s GDPNow forecaster is currently projecting 3.5% annualized growth in the second quarter.
“Monthly data beyond March generally point to a continued, albeit gently cooling, economic expansion,” Klachkin wrote. “We anticipate continued GDP gains this year and a healthy advance in 2024 overall.”
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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