Slower U.S. Economy Starts Year with Lowest Expansion Since Second Quarter of 2023 but Does Not Show Signs of Recession

The U.S. economy started the year with its slowest pace of expansion since the second quarter of 2023, according to data released by the Commerce Department. This marked a significant slowdown from the rapid recovery seen in 2023 but did not show signs of a recession. Real gross domestic product (GDP) increased by 1.6% in the first quarter of this year compared to the fourth quarter of 2023, which was lower than the consensus economist estimates of 2.5%.

Despite this slower growth, the overall economic outlook remains positive, especially considering the Federal Reserve’s efforts to curb inflation that had led to a technical recession two years ago. Investors reacted negatively to the lower-than-expected GDP growth, with S&P 500 futures dropping more than 0.7% and earnings also impacting equity prices. The U.S. economy’s nominal GDP in the first quarter was $28.3 trillion, reinforcing its position as the largest global economy.

Real GDP growth is an important indicator as it accounts for inflation and currency exchange differences