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[BUSINESS] · United States · 85 sources

US Q1 GDP Revised Down to 1.6% as Inflation Holds Near Expectations

The U.S. Commerce Department revised first‑quarter 2026 gross domestic product growth from the initially reported 2.0% annualized rate to 1.6%, reflecting weaker inventory investment and consumer spending. At the same time, the personal consumption expenditures (PCE) price index rose 3.8% year‑over‑year, the strongest increase since May 2023, while core PCE inflation held at about 3.5% year‑over‑year.

Labor market data showed initial unemployment claims falling to 209,000, with a four‑week moving average near historic lows, underscoring continued tightness in hiring despite the slower growth. The mixed picture of modest GDP expansion and resilient employment has eased pressure on the Federal Reserve to alter interest‑rate policy, reinforcing expectations of a “soft landing” for the economy.

Financial markets reacted modestly: U.S. stock indexes slipped slightly, Treasury yields were largely unchanged, and the dollar index edged down. Analysts noted the data points to a stagflation risk but also suggest that inflation pressures may be moderating without a sharp deterioration in the labor market.

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