The American economy expanded at a 1.4% annual pace from January–March, according to the Associated Press, the slowest quarterly growth since spring 2022.
The report released by the government today was a slight upgrade from its previous estimate. Consumer spending grew just 1.5%, down from an initial estimate of 2% in a sign that high interest rates may be taking a toll on the economy. The Commerce Department had previously estimated that the gross domestic product — the economy’s total output of goods and services — advanced at a 1.3% rate last quarter.
The first quarter’s GDP growth marked a sharp pullback from a strong 3.4% pace during the final three months of 2023. Still, today’s report showed that the January–March slowdown was caused mainly by two factors — a surge in imports and a drop in business inventories — that can bounce around from quarter to quarter and don’t necessarily reflect the underlying health of the economy. Imports shaved 0.82 of a percentage point off first-quarter growth. Lower inventories subtracted 0.42 of a percentage point.
Today’s report was the third and final government estimate of first-quarter GDP growth. The Commerce Department will issue its first estimate of the current quarter’s economic performance on July 25.
