US economy grew by just 1.6% in the first quarter, a much slower pace than expected

The US economy cooled more than expected in the first quarter of the year, but remained healthy by historical standards. Economic growth has slowed steadily over the past 12 months, which bodes well for lower interest rates, but the Federal Reserve has made it clear it’s in no rush to cut rates.

Gross domestic product, which measures all the services and goods produced in the economy, measured an annualized rate of 1.6% in the first quarter, the Commerce Department reported Thursday. It was the weakest pace of growth since the second quarter of 2022 when the economy contracted.

That’s a steep slowdown from the fourth quarter’s 3.4% rate and also below the 2.2% rate economists projected, according to a FactSet poll. The figures are adjusted for seasonal swings and inflation.