US Economy Grows Just 1.1% in First Quarter Despite Personal Consumption Spending Accelerating

The US economy increased Real GDP at an annualized rate of 1.1% (consensus 2.0%) after increasing 2.6% in the fourth quarter and rose 3.2% in the third quarter last year Advance Q1 GDP showed. The GDP Price Deflator increased to 4.0% (consensus 3.7%) from 3.9%. The report missed expectations suggesting the economy struggled in the face of rising interest rates, moderating consumer spending (and inflation), political uncertainty and falling sentiment. However weakness wasn’t the consumer, personal consumption expenditure growth accelerated in the first quarter to 3.7% from 1.0% in the fourth quarter with spending on goods up 6.5% and spending on services up 2.3%.

US Factory Worker

U.S. Advance Q1 GDP Highlights

  • Q1 advance GDP +1.1% vs +2.0% expected
  • Net trade added 0.11 pp to GDP vs adding 0.46 pp in Q4
  • Private inventory investment cut 2.26 pp from GDP vs adding 1.46 pp in Q4
  • Govt +0.81 pp vs +0.63 pp in Q4
  • Final Q4 reading was +2.6% annualized Q3 was +3.2% annualized, Q2 was -0.6% annualized.
  • For full 2022, the GDP expanded 2.1%.
  • Real GDP increased 2.1% in 2022 versus 5.9% in 2021.
United States GDP Growth Rate
United States GDP Growth Rate
United States Full Year GDP Growth
  • Core PCE +4.9% vs +4.7% expected (4.4% prior)
United States Core PCE Price Index Annual Change
  • GDP deflator +4.0% vs +3.7% expected
  • Increased to 130.79 points in the first quarter of 2023 from 129.51 points in the fourth quarter of 2022
United States GDP Deflator
  • Consumer spending +3.7% vs +1.0% prior
  • Consumer spending on durables +16.9% vs -1.3% prior
  • GDP final sales +3.4% vs +2.3% expected
  • Public spending increased +4.7% (vs 3.8%).
  • Residential fixed investment contracted for the 8th consecutive period (-4.2 percent vs -25.1 percent in Q4)
  • Nonresidential (Business) fixed investment growth slowed sharply (0.7 percent vs 4.0 percent).
  • Net external demand has also contributed positively to the GDP as exports rose more than imports
  • Exports +4.8% vs -3.7% prior
  • Imports +2.9% vs -4.4% prior

Source: Bureau of Economic Analysis

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