WASHINGTON, May 28 U.S. economic growth was not a strong as initially thought in the first quarter, and momentum is set to slow this quarter, with the war with Iran stoking inflation and squeezing households finances.
Gross domestic product increased at a 1.6% annualized rate last quarter, the Commerce Department’s Bureau of Economic Analysis said in its second estimate of first-quarter GDP on Thursday
Growth was previously reported to have advanced at a 2.0% pace. Economists polled by Reuters had expected that GDP growth would be unrevised at a 2.0% rate. The economy grew at a 0.5% pace in the fourth quarter.
The downgrade to the first-quarter GDP estimate reflected downward revisions to inventory investment and consumer spending. Overall economic activity is mostly being driven by artificial intelligence-related spending. Growth in consumer spending, which accounts for more than two-thirds of the economy, was revised down to a 1.4% rate from the previously reported 1.6% pace.