The U.S. economy grew at a lackluster 1.3% annual rate from January through March as businesses wary of an economic slowdown trimmed their inventories, the government said Thursday, a slight upgrade from its initial estimate.

The government had previously estimated that the economy grew at a 1.1% annual rate last quarter.

The Commerce Department's revised measure Thursday of growth in the nation's gross domestic product — the economy’s total output of goods and services — marked a deceleration from the second half of 2022.

Despite the first-quarter slowdown, consumer spending, which accounts for around 70% of America's economic output, rose at a healthy pace.

The steady weakening of economic growth is a consequence of the Federal Reserve’s aggressive drive to tame inflation, with 10 interest rate hikes over the past 14 months. Across the economy, the Fed’s rate increase have elevated the costs of auto loans, credit card borrowing and business loans.

With mortgage rates having doubled over the past year, the real estate market has already taken a beating: Investment in housing fell from January through March. In April, sales of existing homes were 23% below their level a year earlier.

As the Fed’s rate hikes have gradually slowed growth, inflation has steadily eased from the four-decade high it reached last year. Still, consumer prices were still up 4.9% in April from a year earlier — well above the Fed’s 2% target.

The economy’s steady slowdown is widely expected to lead to a recession later this year. For now, though, most sectors of the economy other than housing are showing surprising resilience. Retail sales have continued to rise. So have orders for manufactured goods.

Most significantly, the nation’s job market remains fundamentally solid. In April, employers added 253,000 jobs, and the unemployment rate matched a 54-year low. The pace of layoffs remains comparatively low. And job openings, though declining, are still well above pre-pandemic levels.