The US economy grew at a slower pace than initially thought in the first quarter

The US economy grew more slowly than initially thought during the first quarter.

Bureau of Economic Analysis Second estimate of US GDP for the first quarter) It showed the economy grew at an annual pace of 1.3% during the period, down from April’s first reading of 1.6% and in line with economists’ estimates.

The update to the growth gauge in the first quarter “primarily reflects a downward revision in consumer spending,” according to the BEA. Personal consumption in the first quarter grew by 2%, down from the previous reading of 2.5%.

The reading was well below fourth-quarter GDP, which was revised to 3.4%.

“The weaker headline growth statistic sounds depressing, but belies strong underlying momentum as the core of the economy — private domestic sales to domestic buyers — showed a healthy 2.5% year-over-year expansion,” Nationwide financial markets expert Oren Klachkin wrote of the first-quarter release this morning. GDP revision data.

The slowdown in headline GDP comes at a time when markets have been sensitive to any readings suggesting the economy may be too hot for the Fed’s liking, with inflation proving firmer than expected. The concern is that rapid growth would fuel price increases.

Read more: How does the labor market affect inflation?

Many forecasters do not see the slowdown in economic growth in the first quarter as the beginning of a broader trend. Before Thursday’s reading, Goldman Sachs expected annual growth of 3.2% in the second quarter. Meanwhile, the Federal Reserve Bank of Atlanta’s GDP forecast currently expects 3.5% annual growth in the second quarter.

“Monthly data after March generally point to a continuing, if slow, economic expansion. We expect continued GDP gains this year and healthy progress in 2024 overall,” Klashkin wrote.

Josh Schaeffer 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 that move stock prices.

Read the latest financial and business news from Yahoo Finance