The U.S. economy experienced slower growth in the first quarter of 2023 compared to the previous quarter, and fell below what economists had predicted. The Gross Domestic Product (GDP) grew at an annualized rate of 1.6% in the first quarter, according to advanced estimates from the Bureau of Economic Analysis released on Thursday.
Some key highlights of the Q1 2023 GDP include a growth rate that is lower than both the 3.4% growth in the final quarter of 2022 and below the economist consensus forecast of 2.5%. The Core Personal Consumption Expenditure (PCE) price index, which is the Federal Reserve’s preferred inflation gauge, slowed from its Q4 2023 reading of 3.4% to just 3.7% in Q1 2023, exceeding expected levels by over half a percent. Real consumer spending growth also slowed from a strong showing in Q4 to just 2.5%, falling short of expectations by over half a percentage point as well.
Market reactions to the GDP print included a slight increase in the U.S. dollar index and a rise in Treasury yields, with the 2-year yield reaching an unprecedented high of 4.95%. Gold prices also went up by almost half a percent as traders adjusted their expectations for Fed rate cuts due to higher-than-expected inflation figures.
In premarket trading on Thursday, futures on major U.S