Economy grew by 1.1% in first quarter of 2023 despite rising rates

Economic growth slowed to 1.1% in the first quarter of this year, down from 2.6% the quarter before, the Bureau of Economic Analysis reported Thursday morning.

Economists had expected gross domestic product growth to increase by 2%, so the preliminary report is weaker than forecast. The report still indicated some resilience to the economy in the face of several major headwinds.

The GDP numbers, which are adjusted for inflation, represent the government’s preliminary estimate — the first of three revisions that will be made over the coming months as analysts get a better picture of how the economy performed from the start of the year through March.

The first-quarter growth came as the Federal Reserve increased its interest rate target, an action meant to slow economic activity.

Still, even though Thursday’s preliminary reading was in the black, most economists expect GDP growth to fall off as the year drags on and economic conditions darken. Many, including Fed staff, are forecasting at least a mild recession later this year.