Traders work on the floor of the New York Stock Exchange (NYSE), New York City, United States, March 16, 2022. /CFP
U.S. economic growth slowed to an annual rate of 1.1 percent in the first quarter of this year, according to advance estimates by the Commerce Department's Bureau of Economic Analysis (BEA).
The latest economic figures were well below market expectations of 2 percent growth, and below the 2.6-percent growth seen in the fourth quarter last year.
The deceleration in real GDP in the first quarter mainly reflected a downturn in private inventory investment and a slowdown in nonresidential fixed investment compared to the fourth quarter last year, said the BEA in a statement.
Meanwhile, excluding food and energy prices, the core personal consumption expenditures (PCE) price index, increased 4.9 percent, compared with an increase of 4.4 percent.
A general view of the U.S. Federal Reserve building, Washington, D.C., United States, March 14, 2022. /CFP
Whether the latest economic data will affect the pace of the U.S. Federal Reserve's monetary policy tightening is a topic of concern for investors.
Earlier in March, the U.S. Fed Chair Jerome Powell told U.S. lawmakers that the central bank would be prepared to increase the pace of rate hikes if the "totality of incoming data" suggests tougher measures are needed to control inflation.
The latest data indicating slowing economic growth in the first quarter could affect the Fed's plans to raise interest rates.
The futures market has priced in a nearly 90-percent likelihood of a 25-basis-point hike on Thursday for the Fed's upcoming meeting next week, with over 11-percent probability of a pause in hikes, according to the CME FedWatch Tool.
With the recent data that shows a slowing momentum in U.S. economic growth in recent months, investors are also putting their focus on the risk of recession.
Earlier this month, Goldman Sachs raised its forecast for a U.S. recession to 35 percent over the next 12 months in response to increased uncertainty about the economic impact of the stress in the banking sector, according to a recent Bloomberg report.
The new estimate is still below the 60 percent median of economists surveyed by Bloomberg over the probability of a recession.
Eugenio Aleman, chief economist at Raymond James, told CNN that he expects the U.S. economy to grow by an annual rate of 0.8 percent in the second quarter. He said the economy is then expected to enter a mild recession in the third quarter, mostly due to the effects of tighter monetary policy.