The U.S. economy grew more robustly in Q1 of 2023 than previously calculated, according to a large upward revision from the Commerce Department on Thursday, CNBC reports.
What’s going on: “Gross domestic product increased at a 2% annualized pace for the January-through-March period, up from the previous estimate of 1.3% and ahead of the 1.4% Dow Jones consensus forecast. This was the third and final estimate for Q1 GDP. The growth rate was 2.6% in the fourth quarter.”
Why it’s important: The news may indicate that the U.S. is not headed toward economic recession.
- A separate report released this week shows that layoffs were below expected levels, “indicating that labor market strength has held up even in the face of the Federal Reserve’s 10 interest rate hikes totaling 5 percentage points.”
- Unemployment claims were down last week, too, according to the Labor Department.
The NAM says: “While the latest NAM Manufacturers’ Outlook Survey revealed that most manufacturers predict a recession in the next 12 months, it is also possible that the U.S. economy could achieve the ‘soft landing’ that the Federal Reserve and other policymakers have been seeking,” said NAM Chief Economist Chad Moutray.
- “This is particularly true if the labor market remains solid and if spending continues to hold up. The current outlook is for the U.S. economy to expand 1.7% in 2023, with 1.2% growth in 2024.”
Yet, manufacturing activity has contracted in eight of the past nine months, but the rate of decline slowed materially in the latest data, with the S&P Global Flash U.S. Manufacturing PMI improving from 46.3 in June to 49.0 in July.