The U.S. economy showed slower growth in the first quarter of 2024 than initially reported, reflecting ongoing challenges stemming from persistent inflation and geopolitical tensions. The Commerce Department’s Bureau of Economic Analysis revised the country’s GDP growth to 1.6 percent, down from an earlier estimate of 2 percent. This figure fell short of economists’ expectations, who had anticipated no change.

Consumer spending, which comprises over two-thirds of the U.S. economy, also saw a downward revision to 1.4 percent growth. Conversely, business spending showed a significant increase, rising to 17.2 percent, a boost largely attributed to investments related to artificial intelligence technology.

Despite this moderate growth, consumer confidence has edged lower. The Conference Board reported that its consumer confidence index declined by 0.7 points in May, settling at 93.1. The organization included additional questions in its survey, revealing that approximately two-thirds of respondents have altered their spending habits by cutting back on purchases and delaying major expenditures due to rising prices.

These findings echo results from a Gallup poll showing the Economic Confidence Index at -45, the lowest level since October 2022 and reflecting sustained economic unease. While this is still above the lowest point recorded during the Biden administration in June 2022, when the index dropped to -58 amid the fallout from the COVID-19 pandemic, it highlights ongoing consumer concern.

Economic anxiety is compounded by broader concerns over inflation and global instability. A CBS News survey found that more than three-quarters of Americans believe their incomes are not keeping pace with inflation. Specifically, 77 percent said their earnings lag behind rising costs, with only 23 percent reporting income growth matching inflation. In addition, only 29 percent of respondents viewed the current state of the economy positively.

Heightened stress over gas prices and uncertainty surrounding the conflict involving the U.S. and Israel in Iran has further fueled unease. Since the war began in February, the closure of the Strait of Hormuz—a vital shipping channel responsible for about one-fifth of global energy transport—has contributed to elevated oil prices worldwide.

Economists have responded to these pressures by revising inflation forecasts upward and anticipating that the Federal Reserve will maintain elevated interest rates for an extended period before considering cuts. This outlook underscores the persistent strain on household budgets amid a complex mix of domestic and international economic challenges.