Gross domestic product, the broadest measure of economic output, rose by an annualized rate of 2% in the first quarter, up from the second estimate of 1.3%. That was also well above economists’ expectations of 1.4% rate, according to Refinitiv. The department’s final estimate of first-quarter GDP reflected an upward revision to exports, consumer spending, state and local government spending, and investment from housing businesses, such as landlords.
“While consumers are still spending, they are exercising more discretion as lingering inflation and the Federal Reserve’s tightening cycle take their toll,” wrote Gregory Daco, chief economist at Ernst & Young, in an analyst note. “We still believe a recession is more likely than not, but we have lowered our recession odds to 55%, and if it were to materialize it would have unique characteristics.” The Fed kept its key federal funds rate steady at a range of 5-5.