U.S. Economic Growth Slows in First Quarter but Remains Resilient Despite Challenges

The U.S. economic growth in the first quarter slowed more than expected, but an increase in inflation indicated that the Federal Reserve would likely not decrease interest rates before September. According to the Commerce Department’s Bureau of Economic Analysis, gross domestic product increased at a 1.6% annualized rate, with growth primarily driven by consumer spending. This was lower than the 2.4% rate forecasted by economists, but above the non-inflationary growth rate of 1.8%.

Despite concerns of a slowdown following the Fed’s rate hikes, the U.S. economy continues to outperform other advanced economies. The International Monetary Fund recently revised its forecast for U.S. growth in 2024 to 2.7%, up from the 2.1% projected in January. This adjustment was due to stronger-than-expected employment and consumer spending, with job gains in the first quarter averaging 276,000 per month, compared to the previous quarter’s average of 212,000.

The resilience of the U.S. economy has been attributed to consumers taking advantage of lower mortgage rates and businesses refinancing debt before the tightening cycle began. In spite of slower-than-expected growth in the first quarter, as well as challenges such as trade tensions and political instability, the overall outlook remains positive for