US first quarter growth missed expectations

While the US economy grew below expectations despite spring consumer spending in the first quarter, growth is expected to slow further as the shock of interest rates spreads higher.

According to the US Department of Commerce’s preliminary estimate, US gross domestic product rose 1.1 percent in the first quarter compared to last year.

While the economy grew 2.6 percent in the fourth quarter, economists polled by Reuters had forecast the economy would grow 2.0 percent in the first quarter.

Although the drop in the pace of economic growth reflects declining investment in stocks, the US Federal Reserve (Fed) is expected to raise the policy rate by another 25 basis points at its monetary policy meeting next week.

Since March 2022, the Federal Reserve has raised interest rates from near zero levels to the 4.75 percent to 5.00 percent range with interest rate hikes. (Reuters)