The latest report from the Commerce Department shows that the US GDP growth in the first quarter of 2023 was lower than expected, coming in at 1.3% instead of the anticipated 1.6%. Despite this disappointment, there was some good news as consumer spending, particularly on automobiles, saw a slight upward revision from previous estimates. Analysts had predicted a growth rate of only 1.2%, but the actual figure was higher.
Despite this setback, consumption remains the main driver of growth for the US economy, accounting for over two-thirds of GDP. In fact, American families increased their spending on healthcare, financial services, and insurance during this period. However, it is worth noting that growth has been volatile in recent years due to significant fluctuations in 2020 and 2021. These fluctuations set both record drops and gains for GDP.
The largest decrease since 1946 (-3.5%) occurred due to the impact of the Covid pandemic, including two months of recession in 2020. However, it then rebounded with a strong growth rate (+5.9%) in 2021, which marked its strongest performance since 1984. As we look forward to future economic reports, we can expect continued volatility as we navigate through these uncertain times.
