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The numbers: The economy was supposed to slow down sharply this year because of higher interest rates. But U.S. grew at a solid 2% annual rate in the first quarter, updated figures show, and the economy still appears to be expanding.
Gross domestic product was revised up from a previously reported 1.3% growth rate, the government said Thursday. GDP is the official scorecard of the economy.
The U.S. is also expected to expand between 1% to 2% in the second quarter that ends on Friday, based on the most recent Wall Street forecasts.
Key details: The increase in GDP in the first quarter was led by strong consumer spending, the main engine of the economy.
Consumer spending was revised up to 4.2% from a prior 3.8% annual clip, explaining most of the upward increase in GDP. Exports were also a bit stronger than previously reported.
Business investment in large structures such as oil rigs or warehouses was also quite strong.
Most other figures in the report were little changed.
GDP is updated twice after the initial results are published to incorporate new information not immediately available.
Big picture: The economy has proven surprisingly resilient even as the Federal Reserve jacks up interest rates to slow down growth and tame inflation. The Fed itself recently raised its GDP forecast for 2023 to 1.1% from 0.4%.
Yet stronger growth could keep inflation elevated and force the Fed to raise rates even higher, boosting the odds of a recession in the next year. Higher borrowing costs depress the economy.
Market reaction: The Dow Jones Industrial Average
DJIA,
and S&P 500
SPX,
were set to open higher in Thursday trades
