Real GDP Growth Weaker than Expected in Q1-2023 Strength in Consumer Spending Offset by Drag from Inventories

Source: Economics Group of Wells Fargo Bank, N.A.


  • Real GDP grew 1.1% at an annualized rate in Q1-2023 relative to the previous quarter, which was weaker than the consensus forecast.
  • Real consumer spending rose at a solid rate of 3.7%. But, a significant inventory swing sliced 2.3 percentage points off of the headline real GDP growth rate. The other spending components were mixed.
  • Monthly data suggest that consumer spending has lost momentum over the past few months. Moreover, consumers are relying increasingly on credit and stockpiled cash to finance their purchases. These factors are not sustainable, in our view.
  • We continue to forecast that the U.S. economy to slip into recession, which we expect will be of moderate severity, in the second half of the year.

GDP Growth Print Comes in Below Consensus Expectation Data released this morning showed that U.S. real GDP grew at an annualized rate of 1.1% in the first quarter relative to Q4-2022 (Figure 1). Not only did the outturn represent a slowdown from the 2.6% sequential growth rate that was registered in Q4, but it was also below the consensus forecast of 1.9%. The rise in the year-over-year rate of GDP growth from 0.9% in Q4 to 1.6% in the first quarter reflects low base effects from last year (i.e., real GDP contracted in Q1-2022). READ FULL ARTICLE >>