The US economy grew slower than initially estimated in the first quarter

The US economy grew slower than expected during the first quarter.

Bureau of Economic Analysis Second estimate of US first quarter gross domestic product (GDP), The report showed the economy grew at an annual rate of 1.3% during the period, down from the 1.6% figure reported earlier in April and in line with economists’ estimates.

According to the BEA, the update to the first quarter growth metric “mainly reflected a slowdown in consumer spending.” Personal consumption grew 2% in the first quarter, down from the previous figure of 2.5%.

The figure is significantly lower than fourth quarter GDP, which was revised down to 3.4%.

“While the weak core growth numbers seem disappointing, they belie solid underlying momentum, as the core of the economy — private home sales to domestic buyers — showed healthy growth of 2.5% annualized,” Nationwide Financial Markets economist Oren Klachkin wrote following the release of revised first-quarter gross domestic product (GDP) data this morning.

The slowdown in core GDP comes at a time when markets have been sensitive to any signs that the economy is running too fast for the Federal Reserve’s liking, as inflation has proven more persistent than expected. The concern is that faster growth will lead to higher prices.

Many forecasters do not view the slowdown in economic growth in the first quarter as the start of a broader trend. Before Thursday’s reading, Goldman Sachs had expected 3.2% annual growth in the second quarter. Meanwhile, the Atlanta Fed’s GDP Now forecasters are currently projecting 3.5% annual growth in the second quarter.

“Monthly data since March generally point to continued, albeit gradually cooling, economic expansion,” Klachkin wrote. “We expect continued GDP growth this year and overall healthy growth in 2024.”

December 28, 2023; San Antonio, Texas, USA; A general view of the United States flag on the field during the playing of the national anthem at the Alamo Bowl between the Arizona Wildcats and Oklahoma Sooners at the Alamodome. Mandatory Credit: Kirby Lee-USA TODAY Sports

December 28, 2023; San Antonio, Texas, USA; A general view of the United States flag on the field during the playing of the national anthem at the Alamo Bowl between the Arizona Wildcats and Oklahoma Sooners at the Alamodome. Mandatory Credit: Kirby Lee-USA TODAY Sports (USA TODAY Sports via Reuters Connect/Reuters)

Josh Shaffer is a reporter for Yahoo Finance. Follow him on X @_joshshaffer,

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