Slowing Economic Activity in First Quarter 2024 as GDP Revised to 1.4%

Published / Modified Jun 27 2024
Source: U.S. Bureau of Economic Analysis, CSIMarket Team / CSIMarket.com

The economic report for the first quarter of 2024 reveals that the real gross domestic product (GDP) increased at an annual rate of 1.4 percent.
This growth, as estimated by the government's third estimate, indicates a slowdown compared to the previous quarter's 3.4 percent increase.
Despite this deceleration, the report highlights the positive contributions from consumer spending, housing investment, business investment, and state and local government expenditure.
However, these gains were partly offset by a decrease in inventory investment, and imports continued to subtract from GDP.
Overall, the report suggests that broad-based economic growth is being sustained, reinforcing hopes for a resilient U.S. economy.

Strong Consumer Spending and Investment Drive First Quarter Growth:

One of the standout factors in the first quarter was the strength of consumer spending, which increased by 1.5 percent on a seasonally adjusted basis.
Accounting for 68.47 percent of economic activity, consumer spending reached an estimated annual rate of $19,143 billion in the fourth quarter.
This robust consumer demand serves as an optimistic sign for the economy.

In addition to consumer spending, investments played a significant role in driving growth.
Overall investments increased by 4.40 percent to $5,021 billion on a seasonally adjusted basis.
Housing investments grew notably by 16.00 percent, contributing positively to GDP.
Business fixed investments rose by 1.60 percent, further bolstering overall growth.

Slow Inventory Buildup and Rising Imports:

While consumer spending and investments performed strongly, slower inventory buildup acted as a drag on growth.
The reduction in inventory investment subtracted -0.40 percentage points from GDP growth.
This decrease indicates that businesses were not aggressively adding to their stockpiles in the first quarter.
Nonetheless, with strong consumer spending and investments, the impact of reduced inventory buildup was partially mitigated.

Another factor that affected GDP growth was the sharp increase in imports, which rose by 6.10 percent in the first quarter, compared to 2.20 percent previously.
Given that imports are subtracted from GDP calculations, this surge hampered overall growth.
Importantly, this highlights the interconnectedness of the U.S. economy with the global market, as fluctuations in international trade affect domestic expansion.


The first quarter of 2024 saw a slowdown in economic growth, with GDP increasing by 1.4 percent, as reported in the government's third estimate.
However, strong consumer spending, investments, and positive contributions from the trade sector provided support for the economy.
The slight decrease in inventory investment and the rise in imports acted as partial hindrances to growth.
Despite these challenges, the overall picture suggests that the U.S. economy is on a self-sustaining path.


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