May 30 - The U.S. economy grew more slowly in the first quarter than previously estimated after downward revisions to consumer and equipment spending and a key measure of inflation ticked down, keeping the Federal Reserve on track to possibly begin cutting interest rates before the end of the year.
Details of the report showed that consumer spending growth, revised down by 0.5 percentage point to a 2.0% annualized rate, mostly reflected a larger-than-earlier-reported drop in household spending on goods. Outlays for big ticket durable goods like motor vehicles and parts dragged on growth by the most since the third quarter of 2021. That drag outpaced upward revisions in the report to business and residential investment.
A separate report showed the goods deficit in April, the gap between exports and imports, widened to the highest level since May 2022, as strong domestic demand for imports was not matched by export trade. The downward revision to GDP brings the first-quarter's growth rate to the lowest since the second quarter of 2022, when the economy contracted, and leaves output below the 1.8% rate that officials at the Fed see as its longer-run, noninflationary potential.
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