US consumer spending grew in the first quarter at the weakest pace since the onset of the pandemic on a sharp deceleration in outlays for a variety of services.
Spending on services contributed 0.3 percentage point to gross domestic product in the first three months of the year, the least since the second quarter of 2020, according to Bureau of Economic Analysis figures published Thursday. That was down sharply from a previously reported 0.79 point boost.
Overall consumer spending increased at a 0.5% pace, instead of the previously reported 1.2%. GDP declined at a downwardly revised 0.5% annualized rate in the first quarter as a result.
The numbers indicate the economy’s woes early in the year weren’t entirely related to the deterioration in the trade balance related to the Trump administration’s tariffs.
“Recreational services and travel are among the components of spending that we flagged as being sensitive to shocks in consumer sentiment,” Ryan Sweet, chief US economist at Oxford Economics, said in a note. “High-frequency data that we track on US travel continue to deteriorate and will be a drag on Q2 GDP.”
All seven major categories of services spending were revised lower in the figures published Thursday. Recreation services spending led the downward revision, subtracting 0.14 percentage point from GDP instead of the previously reported 0.04 point boost.
The contributions from other services, includes net foreign travel, and transportation were also among the categories posting the largest downward revisions.
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