First-quarter GDP growth lifted to 1.3% |
The U.S. economy grew at a 1.3% annual rate in the first quarter, as businesses wary of an economic slowdown trimmed their inventories, the government said Thursday in a slight upgrade from its initial estimate. The government had previously estimated that the economy grew at a 1.1% annual rate. Despite the first-quarter slowdown, consumer spending, which accounts for around 70% of America's economic output, rose at a 3.8% annual pace, the most in nearly two years and an encouraging sign of household confidence. Specifically, spending on physical goods, like appliances and cars, rose 6.3%, also the fastest growth rate since April-June of last year. A cutback in business inventories shaved 2.1 percentage points off January-March growth. “Consumers — the critical lynchpin to the U.S. economy — are still spending, tapping into savings and credit to be able to do so,″ said Jim Baird, chief investment officer for Plante Moran Financial Advisors. “That can’t persist indefinitely though, raising the risk of a more pronounced slowdown or recession the longer the Fed’s battle with inflation drags on.”