U.S. economic growth slowed to a 1.1% annual rate in the first quarter of 2023, according to advance estimates by the Bureau of Economic Analysis.
- That’s below the consensus estimate of 2.0% and a slowdown from the 2.6% growth seen in the final quarter of 2022.
- In the prior decade, the U.S. economy grew at about 2.2% each year.
The details: Nonfarm businesses decreased their inventory stockpiles, removing 2.26 percentage points from top-line growth.
- A weakened housing market also contributed to slowed growth.
- While consumer spending was strong at the beginning of the year, it has slowed more recently as the Federal Reserve has continued raising interest rates, according to The Wall Street Journal (subscription).
- Hiring growth is also easing, the Journal reports.
The good news: Goods consumption and government spending were strong contributors to growth, as were slight increases in net exports and nonresidential fixed investment.
What’s ahead: “Many economists expect the economy to cool even more as the year progresses, with the possibility of a U.S. recession later this year,” according to the Journal.