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 slowdown in 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.
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.
Bank of America US economist Michael Gapen, wrote in a note to clients last Friday his team expected a downward revision to first quarter GDP but that didn’t serve as a cause for concern for economic growth moving forward.
“The bottom line is that the economy moderated somewhat in the first quarter, but it remains on a stable footing overall,” Gapen wrote on Friday.
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
Click here for in-depth analysis of the latest stock market news and events moving stock prices.
Read the latest financial and business news from Yahoo Finance
Source Agencies
