US GDP Growth Revised Down to 1.6 Percent in First Quarter
The Commerce Department revised first-quarter economic growth down to a 1.6 percent annualized rate while the annual PCE price index rose to 3.8 percent in April. Markets reacted to the combination of slower growth and persistent inflation as analysts debated the implications for future Federal Reserve policy.
The United States economy expanded at a 1.6% annualized rate in the first quarter, below the prior 2.0% estimate, while inflation rose 3.8% year-on-year through April. The downward GDP revision and persistent price pressures complicate the Federal Reserve's policy path. This stagflation dynamic—weak growth paired with rising inflation—leaves little room for rate cuts in the near term.
### Growth Slows as Consumer Spending Softens The Commerce Department's Bureau of Economic Analysis lowered its first-quarter GDP estimate from 2.0% to 1.6% on Thursday morning. This downgrade reflected lower inventory investment and a pullback in consumer spending. Economists polled by Reuters had expected the growth figure to remain unrevised at 2.0%.
