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Real gross domestic product (GDP) – the value of all goods and services produced in the United States – expanded at a seasonally adjusted rate of 1.6% from January through March, a pullback from the 3.4% growth in the last quarter of 2023, federal officials said Thursday. 

U.S. stocks fell after the GDP report was released from the U.S. Bureau of Economic Analysis. Economists had been expecting real GDP growth to be around 2.4% for Q1 of 2024.  

The slower than expected growth suggests inflationary pressures persist even as interest rates remain at a 23-year high. 

The 1.6% increase in Q1 real GDP primarily reflected increases in consumer spending and housing investment that were partly offset by a decrease in inventory investment. Imports, which are a subtraction in the calculation of GDP, increased. 

Consumer spending on services, driven by increased spending on healthcare financial services and insurance, was offset by a decrease in purchases of goods, including cars, and gasoline. 

The increase in housing investment was led by brokers’ commissions and other ownership transfer costs and new single-family housing construction. 

The decrease in business inventory investment was led by decreases in wholesale trade and manufacturing.    

Personal income and saving real disposable personal income (DPI)— personal income adjusted for taxes and inflation—increased 1.1% in the first quarter after increasing 2.0% in the fourth quarter of 2023.  Personal saving as a percentage of DPI was 3.6% in the first quarter, compared with 4.0% in the fourth quarter. 

The BEA will release a second estimate of Q1 GDP with more complete data on May 30. A comparison of Q1 GDP rates for the 50 states will be released on June 30.