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MNI BRIEF: US 1Q GDP Short Of Expectations, Consumption Strong

(MNI) WASHINGTON

U.S. GDP grew at an annual rate of 1.1% in the first quarter, down from 2.6% in the fourth quarter and below analysts' expectations for a 1.9% increase, according to the Bureau of Economic Analysis's advance estimate released Thursday.

Final domestic demand rebounded to 3.2% from 0.7% in the fourth quarter. Personal consumption expenditures rose a solid 3.7%, the most since the second quarter of 2021, led by purchases of motor vehicles and parts and services like health care and dining out and travel. That contributed 2.5pp to the headline figure. Offsetting consumption were fixed investment, down 0.4%, and a large decrease in inventory investment, especially in wholesale trade and manufacturing that subtracted 2.3 pp from overall growth.

Core PCE inflation accelerated to 4.9% from 4.4% in the fourth quarter, two-tenths stronger than expected, which will keep the Fed on track for another quarter-point rate hike at next week's meeting. Headline PCE inflation was 4.2%, faster than 3.7% in the previous quarter.

MNI Washington Bureau | +1 202-371-2121 | jean.yung@marketnews.com
MNI Washington Bureau | +1 202-371-2121 | jean.yung@marketnews.com

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