US economic growth last quarter is revised down from 1.6% rate to 1.3%, but consumers kept spending

WASHINGTON (AP) — The U.S. economy grew at a sluggish 1.3% annual pace from January through March, the weakest quarterly rate since the spring of 2022, the government said Thursday in a downgrade from its previous estimate. Consumer spending rose but at a slower pace than previously thought.

The Commerce Department had previously estimated that the nation’s gross domestic product — the total output of goods and services — expanded at a 1.6% rate last quarter.

The first quarter’s GDP growth marked a sharp slowdown from the vigorous 3.4% rate in the final three months of 2023.

But last quarter’s pullback was due mainly to two factors — a surge in imports and a reduction in business inventories — that tend to fluctuate from quarter to quarter. Thursday’s report showed that imports subtracted more than 1 percentage point from last quarter’s growth. A reduction in business inventories took off an nearly half a percentage point.

By contrast, consumer spending, which fuels about 70% of economic growth, rose at a 2% annual rate, down from 2.5% in the first estimate and from 3%-plus rates in the previous two quarters. Spending on goods such as appliances and furniture fell at a 1.9% annual pace, the biggest such quarterly drop since 2021. But services spending rose at a healthy 3.9% clip, the most since mid-2021.

<bsp-list-loadmore data-module="" class=«PageListStandardB» data-gtm-region=«READ MORE» data-gtm-topic=«No Value» data-gtm-modulestyle=«List B»> <bsp-custom-headline custom-headline=«div»> READ MORE </bsp-custom-headline> <bsp-custom-headline custom-headline=«div»> US growth slowed sharply last quarter to 1.6% pace, reflecting an economy pressured by high rates </bsp-custom-headline> <bsp-custom-headline