US economy growth slows as Q1 GDP revised to 1.6% and inflation hits 3.8%

U.S. government data released this week showed that first‑quarter gross domestic product was revised down to a 1.6% annual rate, well below the previously estimated 2% and far short of the White House’s 4‑6% target for year‑end growth. At the same time, the personal consumption expenditures (PCE) price index rose 3.8% year‑over‑year in April, the fastest increase in almost three years, driven largely by higher fuel prices after the conflict in Iran.

The same reports indicated that disposable income for American households is declining, with the personal saving rate slipping to 2.6% from 3.2% in March. Housing market weakness was also evident: new‑home sales fell in April and the average rate on a 30‑year mortgage rose to about 6.53%, after briefly dropping below 6% in February. Economists warned that the combined pressure of rising prices, tighter credit and stagnant wages is tightening household finances, despite President Trump’s repeated assurances of a strong economy.