Economic growth slowed during the first quarter of 2023, rising 1.1% after rising 2.6% during the fourth quarter of 2022, according to CNBC. Economists had been expecting growth of 2%.
The slowdown in growth is attributed to a decline in private inventory investment and a deceleration in nonresidential fixed investment.
Many economists expect the economy to head into recession, though they are uncertain about the timing.
“We would have expected to see some more slowing at this point, though you’re definitely getting signs that you’re on the margin,” said Citigroup economist Veronica Clark. “So it doesn’t look like we’re going to be immediately slowing into a recession. And I think this Q1 data definitely helps to confirm that, especially [since] consumption is still so strong.”
Consumer spending as measured by personal consumption expenditures increased 3.7% and exports were up 4.8%.
“The U.S. economy is likely at an inflection point as consumer spending has softened in recent months,” said Jeffrey Roach, chief economist at LPL Financial. “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.”
