GDP Growth Slows in First Quarter to 1.1%

Staffing Industry Analysts (04/27/23)

US real gross domestic product grew more slowly than estimated, increasing at an annual rate of 1.1% in the first quarter of 2023, according to the advance estimate released today by the US Bureau of Economic Analysis. The increase marked a slowdown from the 2.6% growth witnessed in the fourth quarter.

The deceleration in real GDP from the fourth quarter resulted from a downturn in private inventory investment and a slowdown in nonresidential fixed investment.

Economists polled by Dow Jones had expected GDP to rise at a 2% rate, CNBC reported. “The US economy is likely at an inflection point, as consumer spending has softened in recent months,” Jeffrey Roach, chief economist at LPL Financial, told CNBC. “The backward nature of the GDP report is possibly misleading for markets, as we know consumers were still spending in January but since March have pulled back as consumers are getting more pessimistic about the future.”

The 1.1% increase in real GDP during the first quarter reflected increases in consumer spending, exports, federal government spending, state and local government spending, and nonresidential fixed investment that were partly offset by decreases in private inventory investment and residential fixed investment.

Meanwhile, imports, which are a subtraction in the calculation of GDP, increased in the first quarter.

Today’s announcement reflects the first estimate of first-quarter GDP. A second estimate will be released on May 25.

Separately, the US Department of Labor reported today that US initial jobless claims fell by 16,000 last week to a total of 230,000. The previous week’s level was revised upward by 1,000.

Economists polled by The Wall Street Journal had forecast 249,000 claims for the latest week, MarketWatch reported. The data indicates the demand for workers is holding up despite the economy slowing.

Meanwhile, the four-week moving average of claims fell by 4,000 in the week ended Apr. 22 to a level of 236,000.

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