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U.S. growth, inflation revised lower in the first quarter

Published 05/30/2024, 09:16 AM
Updated 05/30/2024, 10:15 AM
© Reuters.

Investing.com -- The U.S. economy expanded by less than anticipated in the first quarter, while a key measure of inflation slowed by more than initially expected.

The second estimate of U.S. gross domestic product growth in the three months to March came in at 1.3%, down from the first-time reading of 1.6% and slower than the growth of 3.4% registered in the fourth quarter of 2023.

Meanwhile, the quarterly personal consumption expenditures index was downwardly revised to 3.3% from the original mark of 3.4%. Stripping out volatile items like food and fuel, the so-called "core" PCE index was also updated to 3.6% from 3.7%, potentially relieving some concerns over the Federal Reserve's ongoing push to corral U.S. inflation back down to its 2% target level.

Elsewhere, the pace of real consumer spending growth during the quarter was lowered to 2.0%. Advanced estimates had put the level at 2.5%.

"The main culprit for the weaker read is consumer spending," analysts at Wells Fargo said in a note to clients. "Since the start of the Federal Reserve's rate hikes more than two years ago, consumers have demonstrated resilience that defied the lessons of prior cycles. The lagged effect of monetary policy is long and variable. Are policymakers at the Fed finally getting through to the consumer?"

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