Economy Growth Slows

The US economy grew at a lower-than-predicted 1.1% annualized rate in the first three months of the year, according to figures released yesterday. The number is nearly a percentage point less than the Wall Street forecast of 2% and a drop from the adjusted 2.6% pace seen in the fourth quarter of 2022.

Consumer spending—which accounts for two-thirds of gross domestic product—held strong, rising 3.7% during the first quarter and offsetting slowed business investment amid tougher borrowing conditions. Despite inflation, consumers continued to spend more on cars, restaurants, and healthcare, while both exports and nondefense government spending also increased.

Analysts predict the growth slowdown, due in part to the Federal Reserve's nine consecutive interest rate hikes to combat inflation, may signal a mild US recession is likely later this year.

Total US GDP is $26.5T; see historical data here.