US Economy Slowed More Than Expected

The nation's economy slowed last quarter, growing at an annual rate of 1.6% in a sign that the high interest rates may be taking a toll on borrowing and spending, per the AP.

• A slip: Thursday's report from the Commerce Department said the gross domestic product—the economy's total output of goods and services—decelerated from its brisk 3.4% growth rate in the final three months of 2023.
• Below expectations: Economists projected growth of 2.4%, reports the Wall Street Journal. The missed mark had Dow futures down 400 points before the opening bell, notes CNBC.

• Spending slows: Consumers continued to drive growth last quarter but slowed their spending. Growth was also held back by businesses reducing their inventories.
• Big picture: "Growth is slowing, but clearly the economy is still on a solid path," Ben Ayers, senior economist at Nationwide, tells the Washington Post. "We've had very strong job growth that's fueling higher incomes, giving people the money to go out and spend. But that's also kept inflation high, so honestly a little bit of cooling is good news."
• A worry: In the New York Times, Ben Casselman agrees that the pullback on its own may not be a bad thing. "But the slowdown has come at the same time that the Fed's fight against inflation has stalled: Prices rose more quickly in the first quarter than at the end of last year," he writes. "That raises the uncomfortable possibility that high interest rates are taking a toll on economic activity but not succeeding in fully taming inflation."

(More GDP stories.)