Gross domestic product grew at a 1.6 percent annual rate in the first quarter of 2024, down from 3.4 percent at the end of 2023, due to strong consumer spending offset by weakened business investments and exports.
Consumers are driving growth despite concerns about the economy's overall state. High interest rates are not dampening consumer spending, but business investments and exports remain weak.
Wealthier consumers are leading spending, shielded by low debt and fixed-rate mortgages, while lower-income households show restraint. If consumer enthusiasm wanes, the economy could suffer.
The Federal Reserve's effort to cool down the economy while combating inflation may not be fully effective, as rising prices persist. The economy's dependence on consumer spending and the vulnerability of business investments are key concerns.
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