GDP Grew at 1.6% in Q1; Industry Economists Weigh In

(Image courtesy of Bureau of Economic Analysis; Breakout image courtesy of Karolina Grabowska/pexels.com)

Real gross domestic product increased at an annual rate of 1.6% in the first quarter, per the advance estimate released by the Bureau of Economic Analysis.

The fourth-quarter 2023 real GDP number was revised to stand at 3.4%.

“GDP growth in the first quarter at 1.6% not only was a cooldown from the strong pace reported in the second half of 2023 but was also the weakest quarterly growth rate since mid-2022,” said Mortgage Bankers Association Vice President and Deputy Chief Economist Joel Kan. “The details in the report indicated that growth last quarter was driven heavily by service sector spending, as consumer spending continues to be supported by a strong job market. Residential investment had its strongest quarter in four years, as new housing construction remains supported by housing demand and a lack of resale inventory.”

Eyes continue to be on the Federal Reserve’s potential decisions regarding rates.

“While the numbers show a slight slowdown compared with last quarter, we can confidently say the economy continues to hum along. Inflation will likely resume its downward trend, slowly inching toward the Fed’s 2% target. But, until the Fed gains greater confidence in the downward direction of inflation, it is not likely to lower rates, and overall investments in the housing sector will stay tepid, as a result,” said Selma Hepp, CoreLogic Chief Economist.

“There was also a surprisingly strong reading of core PCE inflation. However, this persistence in higher than desired inflation will leave the Fed in no hurry to cut rates. As indicated in our April forecast, we expect potentially two rate cuts in the latter part of this year,” Kan noted.