The economy had less forward momentum at the start of this year than previously thought.Deputy chief U.S. economist at Capital Economics, Andrew Hunter, on the first estimate of gross domestic product (GDP) in the United States for the first quarter of 2023.
Gross Domestic Product = “The total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period” (Investopedia).
What To Know: On Thursday, the U.S. Commerce Department released the first estimate on GDP (a common measure for economic growth) showing growth in the U.S. increasing at 1.1% during the first three months of 2023. This growth rate is less than economists expected and comes after a 2.6% increase in the fourth quarter of 2022. The report explains that decreases in business and residential investment slowed U.S. growth in the first quarter.
Why It Matters: This data signals a slowdown in the growth of the U.S. economy “as interest rate increases and inflation took hold of an economy largely expected to decelerate even further ahead” CNBC reports. And although it reflects an increase in consumer spending during the first three months of 2023, chief economist at LPL Financial Jeffrey Roach explains: “The U.S. economy is likely at an inflection point as consumer spending has softened in recent months. The backward nature of the GDP report is possibly misleading for markets as we know consumers were still spending in January but since March, have pulled back as consumers are getting more pessimistic about the future.”
Important To Note: The data released Thursday is subject to further revision; the next estimate for the first quarter – “based on more complete data” – will be released on May 25.
Looking Ahead: Federal Reserve officials will meet next week to determine whether they will raise the federal funds rate “for the 10th meeting in a row” as they continue to attempt to combat inflation in the world’s largest economy (The New York Times).
U.S. Economy Grew at 1.1% Rate in First Quarter (The New York Times)
by Jenna Lee,