The Bureau of Economic Analysis on Wednesday revised up its estimate for first quarter GDP growth to a 1.3% annual rate, from a previously estimated 1.1%.

The latest update, the second of three, shows that first quarter gross domestic product growth was lower than the preceding quarter's 2.6% clip, showing a slowdown attributable in part to the Federal Reserve's campaign to tighten monetary policy and bring down inflation.

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The Fed once again hiked interest rates this month by a modest degree — a quarter of a percentage point — despite the threat of recession. Most investors expect the Fed to pause hiking rates next month, although a sizable minority expect another rate revision.

The economy has faced some turmoil this year as the Fed has hiked rates, adding to a list of factors that could determine whether the U.S. faces a downturn. The banking system is still in upheaval following the sudden failure of Silicon Valley Bank, which led to the subsequent collapse of Signature Bank and, more recently, First Republic Bank. The echoes from the collapses are still reverberating through the banking sector and caused investors to dial back expectations for just how high rates will rise this year.

Additionally, the housing market has been flailing under the weight of the higher interest rates, which have pushed up mortgage rates. Sales of existing homes declined in April, down a whopping 23.2% from the year before — although new home sales rose last month in a touch of good news. Home prices are falling for both new and existing homes and the overall market is in what many analysts characterize as a "housing recession."

The Fed's target rate is now sitting at 5% to 5.25% — the highest it has been since the financial crisis in 2008. If the Fed keeps raising rates, it would add to downward pressure on GDP growth.

It is worth noting that two quarters of negative GDP growth are typically used as a rule of thumb to indicate a recession. While there were two consecutive quarters of negative GDP growth at the start of last year, the unemployment rate remained impressively low and thus no recession was declared.

This year, the prospects for the employment landscape are a bit grimmer.

The last Fed projections, which came in March, show that the median Fed official thinks the unemployment rate will increase in the coming months. Officials predicted that the unemployment rate will tick up to 4.5% by the end of this year, versus 3.4% today, an acknowledgment of the effects its tightening will have on the economy.

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The committee members in March also revised down their GDP predictions for this year from 0.5% to 0.4% growth, indicating the growing likelihood that a recession will hit the economy in 2023.