United States – The revision to the first-quarter growth figures was made necessary by the current decline in the growth rate of retail trade and equipment investment, showing that the economy had gone through some period of instability in these two areas.
Gross domestic product – the most comprehensive measure of economic activity – expanded at an 1.3% GDP annualized rate during the first three months of the year, a decrease from the initial projection of 1.6% and notably slower than the 3.4% increase in the last three months of 2023.
The cut in the first-quarter growth came after some other weak figures on retail sales and capital expenditure on equipment.
Inflation rate for the first quarter was downwardly revised to 3.3% from 3.4%, the highest quarterly price pressure growth in a year. The inflation metrics, which softened throughout most of last year, started 2024 with a higher than projected reading, causing the members of the Federal Open Market Committee to revise down the timeline for the first rate cut.
Slowest Growth Since Previous Contraction
This downward revision to GDP means that the growth rate for the first quarter of the year is now the slowest since the contraction seen in the second quarter of the year and has left output below the 1.8 percent pace that officials at the Fed deem to be the its sustainable, trend level of output and stable inflation, as reported by Reuters.
Outlook for Second Quarter Remains Uncertain
This relative softness is not envisaged to have carried over to the current second quarter of the year, despite the ongoing positive dynamics in the labor market.