Updated Apr 25, 2024 - Business

U.S. economy grew at 1.6% annualized rate in first quarter

Data: U.S. Department of Commerce; Chart: Axios Visuals

The U.S. economy grew at a 1.6% annualized rate in the first quarter of 2024, the Commerce Department said on Thursday.

Why it matters: The economy slowed significantly from the end of last year—a sign the nation may be entering a more moderate period of growth.

  • Analysts had expected a 2.5% pace of first quarter growth. The GDP number undershot those estimates as it was dragged down by companies depleting their inventories and a surge in imports.
  • By comparison, gross domestic product (GDP) increased at 3.4% annual rate in the fourth quarter of 2023 and rose 4.9% in the three-month period before that.

Zoom in: The latest GDP report, which offers the broadest snapshot of the economy's health, reflected resilient consumer activity that has kept the economy humming in recent months.

  • Consumer spending rose at a 2.5% annualized rate in the first quarter, cooling off a bit from the 3.3% seen in the previous quarter.
  • Housing activity rebounded sharply: Residential investment soared by 14% last quarter, compared to the 2.8% in the final quarter of 2023.

The big picture: The latest GDP report is the freshest sign that the economy is cooling off, even as inflation stays firm.

  • Stickier inflation has pushed off expectations about when and how much the Federal Reserve will slash interest rates this year.
  • Instead, Fed officials have warned in recent weeks that defeating inflation may require the central bank to hold interest rates at a two-decade high for a longer period of time.

Editor's note: This story was updated with a new chart.

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