US Q1 GDP Cut to 1.6% as 2.6% Savings Rate Signals Consumer Strain

8 articles · Updated · continuumeconomics.com · May 28

April data showed consumers leaning on savings: personal income was flat, real disposable income fell 0.5%, and the savings rate dropped to 2.6%, the lowest since June 2022.
That strain sits behind the Q1 GDP revision to 1.6% from 2.0%, with weaker services spending and inventories driving the downgrade even as final sales were only trimmed to 1.5%.
Inflation offered mixed relief: April core PCE rose 0.239% before rounding, softer than expected, but headline PCE climbed 0.4% on the month and 3.8% from a year earlier, the highest since May 2023.
Business demand remained firmer than households, with durable goods orders up 7.9% in April and ex-transport orders rising 1.1%, though core non-defense capital orders ex-aircraft fell 1.1% after a strong March.
Jobless claims rose to 215,000, a five-week high, and continued claims increased to 1.786 million, suggesting labor-market momentum may be easing if high energy prices keep squeezing consumers.

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