US economy grew at weak 1.1% rate in Q1 in sign of slowdown

WASHINGTON AP" target="_self">(AP) — The U.S. economy slowed sharply from January through March, decelerating to just a 1.1% annual pace as higher interest rates hammered the housing market and businesses reduced their inventories.

Thursday's estimate from the Commerce Department showed that the nation's gross domestic product — the broadest gauge of economic output — weakened after growing 3.2% from July through September and 2.6% from October through December.

But consumer spending, which accounts for about 70% of U.S. economic activity, remained resilient, growing at a 3.7% annual pace, the fastest such rate in nearly two years. Spending on goods, in particular, was solid: It rose at its fastest pace since the second quarter of 2021.

Economists had been expecting overall GDP to grow at a 1.9% pace in the January-March quarter. Behind much of the quarter's weakness was a sharp reduction in business inventories, which subtracted roughly 2.3 percentage points from overall growth. Companies typically slash their inventories when they anticipate a coming downturn.