(Washington) U.S. Gross Domestic Product (GDP) growth slowed in the first quarter, but slightly less than initially forecast, coming in at an annualized 1.3%, according to a second estimate released Thursday by the Department of Commerce.
“The revised estimate primarily reflects an upward revision to private investment in inventory,” the ministry said in its statement.
The first estimate had reported growth of 1.1% at an annualized rate, a measure favored by the United States, which compares GDP to that of the previous quarter and then projects the evolution over the whole year at this rate.
This marks a sharp slowdown from the fourth quarter, which saw the economy grow by 2.6%.
Using the same method of calculation as other advanced economies, which simply compare to the previous quarter, growth remains unchanged at 0.3%, half the pace observed in the last quarter of 2022 (0.6%).
This slowdown is linked to the actions taken by the American central bank (Fed) to fight against high inflation.
It has in fact been raising its key rates since March 2022, in order to make access to credit more expensive for households and businesses, in order to slow down consumption and investment. Ultimately, this should help ease the pressure on prices.
“Looking forward, our base case is that the lagged and cumulative effects of the restrictive policy will keep economic growth at a rate below its potential in the coming quarters,” commented Rubeela Farooqi, chief economist for HFE, in a rating.
“There is also downside risk from further tightening of credit conditions, which will impact business hiring and investment decisions and broader economic activity,” she said. added.
