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By Omar Mohammed
Reporter, Economy & Finance
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The U.S. economy accelerated at a slower pace in the first quarter than initially thought, the Commerce Department revealed on Thursday, as consumers pulled back on spending.
The news could spell trouble for President Joe Biden's reelection prospects as voters continually rate him low on his performance on the economy ahead of the election in November.
In the three months to begin the year, the economy grew at annual rate of 1.3 percent, with the latest estimate lower than the initial reading of 1.6 percent that was revealed last month. The economy slowed from the end of last year when it expanded by 3.4 percent.
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"The update primarily reflected a downward revision to consumer spending," the Commerce Department's Bureau of Economic analysis said in a statement.
The economy slowing down comes at a time when a majority of Americans believe that the U.S. is in a recession and blame Biden for their perceived financial challenges. Nearly 60 percent of voters say Biden is responsible for what they believe is a bad economy.
Half of voters surveyed by Redfield & Wilton Strategies for Newsweek on April 11 say the U.S. economy was headed in the wrong direction and close to 60 percent name it as the most important issue facing the country.
This distrust of Biden's management of the economy has contributed to polls showing that he is struggling against the presumptive Republican presidential nominee, former President Donald Trump.
Newsweek contacted the Biden campaign for comment via email on Thursday.
Analysts say that in an environment of tight monetary policy and elevated inflation, the economy growing, albeit at a smaller pace, was a sign of resilience.
"Economic activity remains robust, powered by consumers' ongoing ability and willingness to spend," EY Senior Economist Lydia Boussour said in a note shared with Newsweek, pointing to consumer spending up 2 percent even though it was half a percent lower than the earlier estimate.
"But momentum is gradually slowing as labor conditions cool, with younger and lower income consumers exercising more scrutiny and businesses re-evaluating their talent needs as they face higher financing costs and cooler demand," she added.
One silver lining for Biden is a cooling economy in addition to inflation falling, which Boussour pointed out had "softened" to 2.6 percent on a yearly basis in what was the lowest level since the first quarter of 2021.
This trajectory could spur the Federal Reserve to begin cutting rates, which could help reduce borrowing costs across the economy for things like home and auto loans and business investment, according to some economists.
"The downward revision to economic growth as well as smaller downward revisions to inflation make the Fed a little more likely to start reducing interest rates by September," Bill Adams, chief economist for Comerica Bank, said in a note shared with Newsweek.
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