The economy grew at an inflation-adjusted 1.6% annual rate in the first quarter, the Bureau of Labor Statistics reported in an updated estimate of gross domestic product.
Thursday’s report revised the growth rate, which is adjusted for seasonal variations, down by 0.4 percentage points from the initial reading.
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Dan North, a senior economist with Allianz Trade Americas, told the Washington Examiner that the revision was “pretty remarkable.”
“You know, losing four tenths from the previous reading, you don’t often see a drop that big, so this is pretty remarkable news, I would think,” he said.
Still, the revised rate represents an acceleration from the first quarter, when GDP grew at an anemic 0.5% rate.
And, although below the loftiest expectations of Trump officials, it shows that the economy was growing at a relatively strong clip as the war with Iran began. Since then, inflation has soared as energy products have become far more expensive because of the supply crimp in the Strait of Hormuz.
Business investment, in particular, was robust to start the year, driven in part by the race to build out artificial intelligence and the data centers that support it.
Government spending, too, has helped propel GDP.
CONSUMER SENTIMENT PLUNGES TO RECORD LOW AS INFLATION TRENDS UP AGAIN
While high inflation has bedeviled households and driven consumer sentiment to record lows, other signs point to underlying health in the economy.
At 4.3% in April, the unemployment rate is low by historical standards. New claims for unemployment benefits are extremely low, suggesting that layoffs are rare.
