Stocks plummet on report U.S. GDP growth slowed to 1.6% in first quarter

April 25 (UPI) -- U.S. stocks tumbled on Thursday as the Bureau of Economic Analysis reported that the economy was growing more slowly than expected.

About an hour after trading opened, the Dow Jones was down 629 points, or 1.64%, while the S&P 500 dropped 1.2% and the Nasdaq Composite declined slid 1.45% on the heels of the BEA's first-quarter gross domestic product report which showed that real GDP grew 3.4% for the quarter and an annual rate of 1.6%.

Dow Jones economists had estimated a 2.4% annual increase after a 3.4% bump in the fourth quarter of 2023.

"Compared to the fourth quarter, the deceleration in real GDP in the first quarter primarily reflected decelerations in consumer spending, exports, and state and local government spending and a downturn in federal government spending," the BEA said in a statement.

Consumer spending grew 2.5% in the first quarter compared with 3.3% in the fourth.

The BEA report said increased services spending happened in health care as well as financial services and insurance in the first quarter. Goods spending decreases were mostly in motor vehicles and parts as well as gasoline and other energy goods.

The BEA reported that gross domestic purchases increased 3.1% in the first quarter compared with an increase of 1.9% in the 2023 fourth quarter.

Inflation measured by the personal consumption index was up 3.4% in the first quarter this year while it was 1.8% for the fourth quarter 2023.

The fourth quarter 2023 GDP of 3.4% came in stronger than expected while corporate profits were up by $5.9 billion.

President Joe Biden said in a statement that while the American economy remains strong, with continued steady and stable growth, costs are still too high for working families and he said he's working to lower them.

"The economy has grown more since I took office than at this point in any presidential term in the last 25 years-including 3% growth over the last year while unemployment has stayed below 4% for more than two years," Biden said.

Biden said he's trying to lower prescription drug costs, ban corporate junk fees and lower housing costs by building a million new homes.

He accused congressional Republicans of having no plan to lower living costs.

Instead, he said, they are fighting to "give the wealthy and big corporations more tax cuts while cutting programs like Social Security, Medicare and the Affordable Care Act. "