The advance estimate of GDP for the first quarter was an annual rate of 1.4%. That there would be a drop from the 3.4% rate in the fourth quarter of 2023 was widely expected. The details of what moved and how are important.

But first, recognize that this was a slowing of real gross domestic product growth, not a fall in GDP, and so probably not a sign of a recession. The rough rule-of-thumb of two consecutive quarters of negative growth wouldn’t even start under this result. Although the actual call of a recession by the National Bureau of Economic Research uses a far more complex set of metrics, it has never seen a recession when there was no fall in GDP. Also, advance estimates often change as additional information is available.

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Erik Sherman


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