Economy grew just 1.3% last quarter, consumer spending was weaker than expected

The US economy grew at a sluggish 1.3% annual pace from January through March, the weakest quarterly rate since the spring of 2022, the government said Thursday in a downgrade from its previous estimate.

Consumer spending rose but at a slower pace than previously thought, a sign that high interest rates and lingering inflation are pressuring household budgets.

The Commerce Department had previously estimated that the nation’s gross domestic product — the total output of goods and services — expanded at a 1.6% rate last quarter.

The first quarter’s GDP growth marked a sharp slowdown from the vigorous 3.4% rate in the final three months of 2023.

But last quarter’s pullback was due mainly to two factors — a surge in imports and a reduction in business inventories — that tend to fluctuate from quarter to quarter.

Thursday’s report showed that imports subtracted more than 1 percentage point from last quarter’s growth.