The housing market is slowing. Businesses are pulling back on hiring and investment. Gross domestic product, adjusted for inflation, rose at a 1.1 percent annual rate in the first quarter, according to preliminary data released by the Commerce Department on Thursday. That was down from a 2.6 percent rate in the last three months of 2022 but nonetheless represented a third straight quarter of growth after output declined in the first half of last year. 

But those declines were more than offset by robust spending by consumers, which rose at an annual rate of 3.7 percent, the fastest growth since mid-2021, when the Covid-19 vaccine rollout lifted the economy.

 

Provide an explanation for why the housing market is slowing and businesses are pulling back on hiring and investment.

Can you explain why consumer spending remained robust despite higher interest rates?