The U.S. economy grew more slowly in the first quarter than previously estimated after downward revisions to consumer and equipment spending and a key measure of inflation ticked down, keeping the Federal Reserve on track to possibly begin cutting interest rates before the end of the year.
Gross domestic product - the broadest measure of economic activity - grew at an 1.3% annualized rate from January through March, the Commerce Department reported on Thursday, down from the advance estimate of 1.6% and notably slower than the 3.4% pace in the final three months of 2023.
The downgrade of first-quarter growth followed recent softness in other readings of retail sales and equipment spending. Details of the report showed that consumer spending growth, revised down by 0.5 percentage point to a 2.0% annualized rate, mostly reflected a larger-than-earlier-reported drop in household spending on goods. Outlays for big ticket durable goods like motor vehicles and parts dragged on growth by the most since the third quarter of 2021. That drag outpaced upward revisions in the report to business and residential investment. A measure of inflation during the first quarter was also revised down to 3.3% from 3.4%, the stiffest quarterly price-pressure growth in a year. After easing through much of last year, measures of inflation came in higher than expected to start 2024, driving Fed policymakers to push back expectations for when they'll be able to pivot to interest rate cuts.
Source: Reuters