In second reading, US GDP is revised downwards to 1.6% in the 1st quarter

US economic growth was not as strong as initially thought in the first quarter, and is expected to slow this quarter, with the war with Iran fueling inflation and putting pressure on household finances.

The Gross Domestic Product (GDP) of the United States grew at an annualized rate of 1.6% in the last quarter, reported the American Department of Commerce in the second reading of data for the period in question, released this Thursday (28). Previously, the forecast was for growth of 2.0%. Economists polled by Reuters expected GDP growth to remain unchanged at 2.0%, also in annualized terms.

The economy grew at a rate of 0.5% in the fourth quarter. The downward revision to the first-quarter GDP estimate reflected downward revisions to inventory investments and consumer spending.

Overall economic activity is being driven primarily by spending related to artificial intelligence.

Growth in consumer spending, which accounts for more than two-thirds of the economy, was revised downward from 1.6% to 1.4%. Tax refunds have provided some relief to families in the face of soaring gasoline prices.

Business spending on equipment increased at an unrevised growth rate of 17.2%. Final sales to private domestic buyers grew at a rate of 2.4%. This represents a slight downward revision from the previous estimate of 2.5% growth.

Profits from current production increased at a rate of $40.4 billion in the first quarter, a sharp slowdown from the $246.9 billion growth rate in the fourth quarter.

Measured from an income perspective, economic growth was 0.9% in the January-March quarter. Gross National Income grew at a rate of 1.6% in the fourth quarter.

Economists estimate that the conflict in the Middle East will affect economic growth from the second quarter onwards.

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Source: CNN