ARLINGTON, Va.—According to the Commerce Department's final estimate for the first-quarter, the U.S. economy grew 3.1% – growth which NAFCU Chief Economist and Vice President of Research Curt Long called "solid,” but he continues to predict a downturn.
"Despite the solid headline figure, weak consumer spending during the quarter is concerning," said Long in a NAFCU Macro Data Flash report. "It is unlikely that segments like inventory accumulation and trade will continue to buoy GDP as they did in the first quarter. "On the bright side, retail spending has picked up a bit in the current quarter and should remain strong enough to ward off a recession this year.
"The Commerce Department's measure of inflation was revised up, but it remains well below the Fed's target. NAFCU continues to expect a rate cut from the Fed in the third quarter," Long added.
Other Factors
Contributions to growth of real GDP came from gains in consumption spending (+0.94%), business investment (+0.53%), inventory accumulation (+0.55%) and government spending (+0.49%). Residential investment reduced growth 0.08%.
PCE inflation, the Fed's preferred inflation metric, decreased from 1.5% in the fourth quarter to an upwardly revised 0.5% in the first quarter. However, core PCE inflation – excluding food and energy – decreased to 1.2%, according to the Commerce Department.