U.S. GDP Grows Modestly in last quarter, Employment Slows but Remains Robust
Consumer Price Inflation Elevated but Slowing, Banking Sector Stress Eases
In the first quarter of 2023, the U.S. economy experienced modest real GDP growth, driven by an increase in personal consumption expenditures (PCE), according to the most recent Federal Open Market Committee (FOMC) meeting minutes released Wednesday. Employment gains slowed but remained robust, with the unemployment rate ticking down to 3.5 percent. Meanwhile, consumer price inflation continued to be elevated but showed signs of slowing, according to information from the May 2-3 meeting.
U.S. Economic Outlook
The first quarter saw a modest growth in real GDP, largely fueled by a surge in PCE. Consumer spending picked up throughout the quarter, with a significant spike in January followed by a slight net decline in February and March. Notably, light motor vehicle sales saw a marked increase in April.
Business fixed investment slowed further, with new orders for nondefense capital goods excluding aircraft continuing to decline in March, signaling a potential weakness in capital goods shipments in the near term. Residential investment also declined, albeit at a slower pace than last year. Meanwhile, net exports made a small positive contribution to GDP growth as exports rebounded more strongly than imports from their fourth-quarter declines.
