The Bureau of Economic Analysis has released its second estimate of first quarter US gross domestic product (GDP), showing that the economy grew at an annualized pace of 1.3%, lower than the initial reading of 1.6%. This revision was mainly due to a decrease in consumer spending, with personal consumption growing at 2%, down from the previous 2.5% estimate. Despite this lower headline growth, economist Oren Klachkin pointed out that there is solid underlying momentum in the economy, as private domestic sales to domestic purchasers expanded by 2.5% annually.
The slowdown in GDP growth has raised concerns among investors, who fear that rapid economic growth may lead to increased inflation. However, many forecasters are not viewing the first quarter slowdown as the beginning of a larger trend. Goldman Sachs projected 3.2% growth in the second quarter, while the Atlanta Fed’s GDPNow forecaster is anticipating 3.5% growth. Klachkin remains optimistic about the overall economic outlook for 2024, expecting continued GDP gains and a healthy advance.
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