US gross domestic product increased by 2 percent in the first quarter of 2023 compared with the prior quarter, according to the third estimate of data released this Thursday by the Bureau of Economic Analysis. The BEA note confirms that the quarterly gain reflects a mixture of rising consumer activity, improved export performance, and greater government spending at the federal, state, and local levels, alongside growth in non-residential fixed investment. On the flip side, private inventory investment slipped and residential fixed investment also declined, while higher imports trimmed overall growth.
The latest revisions show stronger exports and higher household consumption than previously forecast, even as the figures for federal non-defense outlays, non-residential fixed investment, and imports were slightly revised downward. In essence, the revised data paint a clearer picture of the forces shaping the economy in the January-to-March period, indicating a positive momentum for production and spending, tempered by some demand-side and external headwinds.
When viewed on a fixed-dollar basis, which is the BEA’s preferred presentation method for real-time comparisons, US GDP rose by 6.1 percent in the first quarter of the year. This contrasts with a 6.6 percent growth rate recorded in the fourth quarter of 2022, underscoring a deceleration in the pace of expansion from late 2022 to early 2023, though still indicating solid quarterly progress.
The price index for personal consumption expenditures, which serves as a key inflation gauge used by the Federal Reserve, rose by 4.1 percent in the quarter. This outcome marks a slight step down from the prior estimate by one-tenth of a percentage point, offering a marginally cooler view of consumer price changes during the period.
Excluding the often-volatile food and energy components, the index advanced by 4.9 percent, a touch lower than earlier projections and in line with the initial data preview. This “core” measure helps policymakers assess underlying inflation trends, filtering out short-term price swings in the most fluctuating categories. Overall, the quarter’s results reflect a mix of resilient demand and selective efficiency gains across multiple sectors, with price movements aligning more closely with a gradual, rather than abrupt, inflation trajectory.