US Economy Slows in First Quarter: GDP Growth Revised Down to 1.3%
The US economy grew more slowly than initially thought during the first quarter, according to the Bureau of Economic Analysis’s second estimate of first quarter US gross domestic product (GDP). The updated figure showed the economy grew at an annualized pace of 1.3%, down from the initial reading of 1.6% and in line with economist estimates.
The downward revision was primarily due to a decrease in consumer spending, which grew at 2% in the first quarter, down from the previous estimate of 2.5%. Despite the slower growth, some economists remain optimistic about the overall health of the economy.
Nationwide financial markets economist Oren Klachkin noted that while the headline growth statistic may appear discouraging, the core of the economy showed a healthy expansion of 2.5% annualized. This suggests that the slowdown in GDP may not be indicative of a broader trend.
The slower growth comes at a time when markets are sensitive to signs that the economy may be overheating, as inflation has been higher than expected. However, many forecasters do not see the first quarter slowdown as a cause for concern, with projections for stronger growth in the second quarter.
Goldman Sachs expects 3.2% annualized growth in the second quarter, while the Atlanta Fed’s GDPNow forecaster is projecting 3.5% growth. Overall, economists anticipate continued GDP gains this year and a healthy advance in 2024.
Despite the slower growth in the first quarter, the outlook for the US economy remains positive, with expectations for continued expansion in the coming months.
