US economy stronger than reported at start of 2023

BBC: US economic growth was stronger than previously reported at the start of the year - news that could help bolster the case for higher interest rates in the world’s largest economy.

The Commerce Department said the latest data showed the US economy grew at an annual rate of 2 percent in the first three months of the year.

Its first estimate put growth at 1.1 percent in the January to March period. The boost reflected stronger consumer spending than previously understood. The US central bank has been trying to cool the economy, aiming to ease the pressures pushing up prices.It has raised its key interest rate by five percentage points since March 2022, to more than 5 percent and signalled that more hikes are in the offing.

The moves had raised concerns that they might lead to a painful slowdown, as higher rates weigh on activity, such as spending and business expansions. Many companies had reported concerns about the outlook earlier this year but hiring has remained strong and other data has painted a brighter picture.

As well as consumer spending, the Commerce Department on Thursday said exports were also greater than previously reported.

“Narrative on growth shifts, again. Signs of slowing scant,” Diane Swonk, chief economist at KPMG in the US, tweeted in response to the report.