U.S. GDP Growth Slows More Than Previously Estimated In Q1

Revised data released by the Commerce Department on Thursday showed U.S. economic growth slowed by more than previously estimated in the first quarter of 2024.

The Commerce Department said gross domestic product climbed by 1.3 percent in the first quarter compared to the previously reported 1.6 percent jump.

The downwardly revised increase, which was in line with economist estimates, compares to the 3.4 percent surge in GDP in the fourth quarter of 2023.

The slower than previously estimated growth reflected downward revisions to consumer spending, private inventory investment and federal government spending.

Meanwhile, upward revisions to state and local government spending, nonresidential fixed investment, residential fixed investment and exports helped limit the downside.

The report also said the slowdown in GDP growth compared to the fourth quarter primarily reflected decelerations in consumer spending, exports, and state and local government spending and a downturn in federal government spending.

These movements were partly offset by an acceleration in residential fixed investment, the Commerce Department said.

“The economic data today are a double-edged sword,” said Chris Zaccarelli, Chief Investment Officer for Independent Advisor Alliance. “On the one hand, the slowing GDP (1.3% from 1.6%) and slowing personal consumption are a sign that the economic expansion is cooling, which could be a concern for companies and stock market investors.”

He added, “On the other hand, slowing consumption and economic growth could be just the news we need to see in order for the rate of inflation to keep coming down and allow the Fed to reduce interest rates after all.”

On the inflation front, the surge by the personal consumption expenditures price index in the first quarter was downwardly revised to 3.3 percent from 3.4 percent, although this still represents a significant acceleration from the 1.8 percent increase in the fourth quarter.

Excluding food and energy prices, the PCE price index surged 3.6 percent in the first quarter compared to the previously reported 3.7 percent spike. The core CPE Index jumped 2.0 percent in the fourth quarter.

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