The final word on the Gross Domestic Product (GDP) in the first quarter is out, and it confirms that U.S. economic growth slowed considerably in the first quarter, but not quite as dramatically as an earlier ไestimate showed. 

The U.S. economy grew at an annual rate of 1.4% in the first quarter, down from 3.4% in the fourth quarter of 2023 the Bureau of Economic Analysis said Thursday.

It was the third and final estimate of GDP growth, revising figures that first came ouꦛt in April. The second estimate, in May, ha✃d shown a 1.3% growth rate. 

The latest reading on GDP, which measures the country’s entire economic output, incorporated new data showing that the U.S. imported fewer goods and services than previously thought. More imports take away from the country's economic output.

GDP Revision Shows Slower Consumer Spending

The lessened impact of imports outweighed declines in the estimates for several other areas, including consumer spending, the main engine of the economy. The 1.4% rate was in line with the expectations of forecasters, according to a survey of economists by Dow Jones Newswires and the Wall Street Journal.

The GDP reading indicates the economy has slowed as the Federal Reserve’s high interest rates have discouraged borrowing and spending, as intended, to subdue high inflation. The economy is still growing, albeit at a slower pace, meaning that those high rates have yet to cause a recession. That could change if consumer spending continues to drop.

“The cycle that we’re in has been led by consumer spending and if t༺hat slows then it could be the beginning of a downturn in economic activity, which would have negative🦂 implications for corporate profits and the stock market,” Chris Zaccarelli, chief investment officer for Independent Advisor Alliance in Charlotte, North Carolina, wrote in a commentary.

However, economists expect GDP won't signal an economic slump this year. According to the early estimates from the Federal Reserve Bank of Atlanta, GDP is expected to nearly double in the second quarter, rising to 3.0%.

"The monthly data are beginning to flag some slowdown though we think the economy will hold up well in the back half of the year," wrote Nationwide's Financial Markets Economist Oren Klachkin.