US growth slower than estimated in first quarter of 2024
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Overall, GDP growth in the first quarter was supported by consumer spending, business investment and government spending.
PHOTO: AFP
WASHINGTON - The US economy grew less than initially estimated in the first quarter of 2024 as consumer spending cooled, the government reported on May 30.
The world’s biggest economy expanded at an annual rate of 1.3 per cent in the January to March period, the Commerce Department said, below the 1.6 per cent figure published in April. This revision was in line with analysts’ expectations.
Both growth numbers mark a significant deceleration from the 3.4 per cent expansion seen in the final quarter of 2023.
While President Joe Biden and officials maintain that the US economy remains robust, he is struggling to convince voters of his performance on the economic front ahead of November’s presidential election.
“The update primarily reflected a downward revision to consumer spending,” the Commerce Department said of the revision on May 30.
But business investment expanded at a stronger pace while residential investment accelerated more than estimated, said chief US economist Rubeela Farooqi of High Frequency Economics, in a note.
Overall, gross domestic product growth in the first quarter was supported by consumer spending, business investment and government spending.
But the slowdown from late 2023 to early 2024 came about with decelerations in consumption, government spending and exports, the Commerce Department said.
‘Uncertain’ outlook
“The outlook going forward is uncertain,” Ms Farooqi said.
The Federal Reserve could delay the start of interest rate cuts as it tries to stamp out stubborn inflation – and this could weigh on growth in the coming quarters.
“But a weaker growth path that leads to a Fed pivot to lower rates over time should be supportive of households and businesses,” Ms Farooqi added.
While growth has cooled, the US economy has been largely resilient in the face of higher interest rates, with unemployment remaining low and the job market stronger than expected.
This, in turn, has allowed people to continue spending.
But with households drawing down on savings from the Covid-19 pandemic and interest rates still elevated, analysts generally expect consumption to pull back. AFP
