The U.S. economy grew far slower than economists expected in the first quarter of 2023, according to data released Thursday by the Commerce Department.
Gross domestic product (GDP) rose at an annualized rate of 1.1 percent in the first quarter, well below the 2 percent growth rate projected by economists and the 2.6 percent rate from the fourth quarter of 2022.
A rush of early-year consumer spending helped keep the economy firmly out of recession during the first quarter. But a steep decline in business spending and investment took a serious chunk out of growth.
The unexpectedly steep slowdown in economic growth is the latest sign of the U.S. economy feeling the brunt of stubborn inflation and steep Federal Reserve rate hikes.
The aftermath of the March banking crisis and fears of another financial crunch are also slowing the economy through steeper borrowing costs and less consumer confidence.
“The US economy is unwell, and it’s starting to show,” wrote EY chief economist Greg Daco in a Thursday analysis.
“Further softening in the job market in coming months — the last remaining leg propping up the consumer — will likely trigger a pullback in personal consumption,” he wrote.
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