Revised US Q1 economic growth rate up from earlier assessment
Showing surprising resilience in the face of higher interest rates, the U.S. economy grew at a 2% annual pace from January–March as consumers spent at the fastest pace in nearly two years, the Associated Press reports.
Thursday’s revised figure from the Commerce Department sharply upgraded its assessment of first-quarter growth from its previous estimate of a 1.3% annual rate.
Despite the uptick, the government’s third and final report on January–March economic growth still marked a deceleration from the 2.6% annual rate seen October– December and the 3.2% growth from July– September. The economy has been slowed by the Federal Reserve’s aggressive drive to tame inflation through a series of interest rate hikes beginning early last year.
Yet Thursday’s report on the nation’s gross domestic product — the total output of goods and services — showed why the economy has so far managed to defy expectations of a coming recession: consumers continue to spend despite ever-rising borrowing costs. Their spending, which fuels about 70% of the economy, rose at a 4.2% annual rate in the January–March quarter, the most since April–June 2021.
A surge in petroleum and other exports also contributed to the upgraded estimate of growth during the first quarter.
In the current April–June quarter, the economy is believed to be slowing further but still managing to maintain its growth. Economists surveyed by the data firm FactSet have estimated that annual growth for the quarter will amount to 1%.