Growth in the U.S. slowed considerably during the first three months of the year as interest rate increases and inflation took hold of an economy largely expected to decelerate even further ahead.
Gross domestic product, a measure of all goods and services produced for the period, rose at a 1.1% annualized pace in the first quarter, the Commerce Department reported Thursday. Economists surveyed by Dow Jones had been expecting growth of 2%.
The growth rate followed a fourth quarter in which GDP rose 2.6%.
The report also showed that the personal consumption expenditures price index, an inflation measure that the Federal Reserve follows closely, increased 4.2%, ahead of the 3.7% estimate. High inflation and slow growth is sometimes described as “stagflation,” which characterized the late 1970s and early ’80s U.S. economy.
Stocks initially reacted little to the report, with major indexes pointing to a higher open. Treasury yields increased.
The slowdown in growth came due to a decline in private inventory investment and a deceleration in nonresidential fixed investment, the report stated. Consumer spending and exports increased.
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