The U.S. economy slowed to a 1.1% annual growth rate in the first quarter of 2023, according to GDP statistics released by the Bureau of Economic Analysis (BEA) on Thursday morning.

Real GDP increased by 2.6% in the fourth quarter of 2022, according to the BEA. Economists expected the GDP would be roughly 2% in the first quarter of 2023, but consumers experienced high inflation and hiked interest rates, which led to a slowdown in spending, according to The Wall Street Journal.

“The consumer is holding up well despite inflation and a Fed that has been tightening its stance pretty aggressively,” Jan Groen, an economist at TD Securities, told the WSJ. “The tighter credit supply will start to bite.”

The Federal Reserve has been hiking interest rates in an attempt to cool down a hot economy and bring down rampant inflation, according to the Wall Street Journal. But consumers decreased retail spending in February and March, and home sales and manufacturing output declined in March.

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Jason Cohen

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