US economic growth revised downwards in first quarter

The downgrade in first-quarter growth followed recent weakness in retail sales and capital goods spending readings.

The inflation rate for the first quarter was revised downwards, from 3.4% to 3.3%, marking the largest quarterly growth in price pressure in a year. After moderating for much of last year, inflation rose above expectations in early 2024, prompting Federal Reserve officials to delay expectations of cutting interest rates.

The downward revision to GDP puts the first-quarter growth rate at the lowest since the second quarter of 2022, when the economy contracted, and leaves output below the 1.8% rate that Fed officials consider its long-term non-inflationary potential.

However, the weak start to the year is not expected to persist into the second quarter, thanks in part to the strength of the labor market.