The Commerce Department’s report on Thursday revealed that U.S. economic growth fell short of expectations at the beginning of the year, accompanied by a faster rise in prices.

Gross domestic product (GDP), a measure of goods and services produced from January to March, increased at a 1.6% annualized pace after adjustments for seasonality and inflation, as reported by the Bureau of Economic Analysis.

Economists surveyed had anticipated a 2.4% increase, following gains of 3.4% in the previous quarter of 2023 and 4.9% in the period before that.

Consumer spending rose by 2.5% during the period, lower than the 3.3% increase in the previous quarter and below the 3% estimate from Wall Street, CNBC reported.

Despite this, positive contributions from fixed investment and government spending at the state and local levels helped maintain GDP growth.

However, a decrease in private inventory investment and an uptick in imports detracted from growth.

Net exports had a negative impact of 0.86 percentage points on the growth rate, while consumer spending contributed positively with 1.68 percentage points.

Written by B.C. Begley