US Q1 GDP revised to 1.6% as consumer spending slows

The U.S. economy grew at a slower pace than initially estimated in the first quarter, according to revised government data released Thursday. The Commerce Department’s Bureau of Economic Analysis reported that gross domestic product increased at an annualized rate of 1.6%, a downward revision from the initial estimate of 2.0% growth. Economists had generally expected the figure to remain unchanged.

The revision reflected weaker inventory investment and a slowdown in consumer spending, which accounts for more than two-thirds of economic activity. Consumer spending growth was revised down to a 1.4% rate. In contrast, business spending on equipment remained robust, increasing at a 17.2% pace. Officials noted that overall economic activity is currently being driven largely by spending related to artificial intelligence.

The report coincided with new inflation data showing persistent price pressures. A key inflation gauge, the personal consumption expenditures price index, rose 3.8% in April compared to a year ago, marking the highest annual increase since May 2023. On a monthly basis, prices rose 0.4%.

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