Introduction

The United States recorded economic growth of 2% in the first quarter of this year, according to what the US Department of Commerce announced on Thursday, an upward revision to previous estimates, thanks to higher-than-expected consumer spending.

Slowdown in GDP Growth

The numbers reflect a persistent slowdown in gross domestic product growth, which stood at 2.6% in the fourth quarter of last year, but well above the 1.1% annual rate originally estimated.

Impact of Consumer Spending

According to a report from the Department of Commerce, “the update to preliminary estimates reflects an upward revision in exports and consumer spending,” according to Agence France-Presse.

Offsetting Declines

The ministry indicated that these figures were partly offset by declines in other areas such as non-residential fixed investment.

Boost from Consumption

Consumption has given a boost to the US economy, which has off to a strong start in 2023 despite the banking crisis and the impact of higher interest rates on the future outlook.

Slowing Economic Activity

However, economic activity is slowing after the Federal Reserve (US central bank) quickly raised key interest rates to contain inflation, which is still well above its 2% target.

Suspension of Interest Rate Hikes

And in mid-June, the Federal Reserve for the first time since March 2022 announced the suspension of key interest rate hikes.

Monitoring the Economic Recovery

After raising interest rates 10 times in a row to five percentage points in total, the US central bank decided at its last meeting to leave rates unchanged, in what authorities say was intended to give more room to monitor the economic recovery.