WASHINGTON, D.C. – Consumer spending surged in the first quarter of 2024, driven by a robust increase in services, according to recent data released by the Bureau of Economic Analysis. This growth marked the fastest expansion since 2021, adjusted for inflation. Private fixed investment also saw a significant jump, reaching its highest growth rate in two years.

While consumer spending on services experienced a 4.0% surge, spending on goods saw a slight decline of 0.4%. Gross private investment also increased by 3.2%, fueled by a 5.3% surge in fixed investments. However, government consumption expenditure and investment showed signs of slowing down after several quarterly spikes, with federal government spending declining in the first quarter.

The Gross Domestic Product (GDP), adjusted for inflation, grew by an annualized rate of 1.6% in the first quarter of 2024, following a 3.4% increase in the fourth quarter of the previous year. Consumer spending, which makes up 69% of the GDP, saw a 2.5% increase overall. However, the trade deficit worsened significantly due to a surge in imports, impacting the overall GDP growth.

Government spending, which accounts for 17% of GDP, experienced a slight increase of 1.2%, with federal government spending showing a decline. Despite this, analysts believe that the slowdown in government spending may be temporary, as there is no indication of a long-term trend of reduced spending.

Meanwhile, private domestic investment saw a notable increase of 3.2%, reaching $4.2 trillion annualized and adjusted for inflation. This growth was primarily driven by a 5.3% surge in fixed investment, with residential fixed investment experiencing the fastest increase since 2020.

Overall, the first quarter of 2024 showed mixed results for the US economy, with strong consumer spending and private investment offset by challenges in trade and government spending. Analysts will continue to monitor these trends to assess the overall health of the economy moving forward.