Posted: Jun 29, 2023 at 8:47 a.m. ET
The numbers: The economy was supposed to slow sharply this year due to higher interest rates. But the US grew at a solid 2% annualized rate in the first quarter, updated numbers show, and the economy still appears to be expanding.
On Thursday, the government said the gross domestic product was revised up from a previously reported growth rate of 1.3%. GDP is the official scorecard of an economy.
the…
Numbers: The economy was supposed to slow sharply this year due to higher interest rates. But the US grew at a solid 2% annualized rate in the first quarter, updated numbers show, and the economy still appears to be expanding.
GDP was revised up from a previously reported growth rate of 1.3%, the government said Thursday. GDP is the official scorecard of an economy.
The US is also expected to expand between 1% to 2% in the second quarter that ends Friday, based on the latest Wall Street forecast.
Key details: The increase in GDP in the first quarter was driven by strong consumer spending, the main driver of the economy.
Consumer spending was revised to 4.2% from the previous annual rate of 3.8%, explaining most of the upward increase in GDP. Exports were also slightly stronger than previously reported.
Commercial investment in large structures such as oil rigs or warehouses was also very strong.
Most of the other numbers in the report were little changed.
GDP is updated twice after preliminary results are published to include new information not immediately available.
The Big Picture: The economy has proven surprisingly resilient even as the Federal Reserve has raised interest rates to slow growth and tame inflation. The Fed itself recently raised its GDP forecast for 2023 to 1.1% from 0.4%.
However, strong growth could keep inflation high and force the Fed to raise interest rates even higher, boosting the odds of a recession next year. Higher borrowing costs weaken the economy.
Market reaction: Dow Jones Industrial Average
DJIA
and the S&P 500
SPX
It is set to open higher in Thursday’s trading
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