US ECONOMIC GROWTH slowed in the first quarter by more than expected as tepid business investment and a pullback in inventories tempered a pickup in consumer spending.
Gross domestic product rose at a 1.1% annualised rate on the back of the strongest consumer spending in nearly two years, the Commerce Department's initial estimate showed Thursday. The Federal Reserve's preferred underlying inflation metric accelerated to a one-year high.
The 3.7% increase in consumer spending reflected gains in both goods and services, including a surge in purchases of motor vehicles. Business investment in equipment posted the biggest drop since the start of the pandemic and inventories subtracted the most from GDP in two years.
The figures illustrate economic growth that is gradually downshifting under the weight of Fed interest-rate hikes and elevated inflation. While the economy bounded ahead at the start of the year, helped in part by unseasonably warm weather, households and businesses pulled back on spending as the quarter progressed.
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