WASHINGTON, April 25 Reuters The U.S. economy grew at its slowest pace in nearly two years as a jump in imports to meet stillstrong consumer spending widened the trade deficit, but an acceleration in inflation reinforced expectations that the Federal Reserve would not cut interest rates before September.
The slowdown in growth reported by the Commerce Department in a snapshot of firstquarter gross domestic product on Thursday also reflected a slower pace of inventory accumulation by businesses and downshift in government spending. Domestic demand remained strong last quarter.
This report comes in with mixed messages, said Olu Sonola, head of economic research at Fitch. If growth continues to slowly decelerate, but inflation strongly takes off again in the wrong direction, the expectation of a Fed interest rate cut in 2024 is starting to look increasingly more out of reach.
Gross domestic product increased at a 1.6 annualized rate last quarter, the Commerce Department39;s Bureau of Economic Analysis said. Growth was largely supported by consumer spending. Economists polled by Reuters had forecast GDP rising at a 2.4 rate, with estimates ranging from a 1.0 pace to a 3.1 rate.
The economy grew at a 3.4 rate in the fourth quarter. The first quarter growth39;s pace was below what U.S. central bank officials regard as the noninflationary growth rate of 1.8.
Inflation surged, with the personal consumption expenditures PCE price index excluding food and energy increasing…