The US economy grew slightly faster than originally reported in the first three months of the year, on stronger consumer spending and exports, the Commerce Department said Thursday.
But even with the upward revision making GDP growth two-tenths higher than last month’s estimate, the first quarter of President Donald Trump’s administration was still was comparatively sluggish at 1.4 percent.
Based on a fuller set of data, the slightly rosier new figures surpassed the consensus forecast, but the growth pace still slowed sharply from the final three months of 2016, when the world’s largest economy expanded by 2.1 percent.
But economists say first quarters in recent years have seen below-average growth, and expect the pace to accelerate in the current quarter. The Atlanta Federal Reserve Bank currently forecasts much faster 2.9 percent growth for the April-June period.
Jim O’Sullivan of High Frequency Economics said growth remained a disappointment but not a surprise.
“First-quarter growth still looks weak, even relative to the paltry expansion-to-date,” he wrote in a client note.
“However, growth has tended to be below trend in first quarters recent years,” he said. “Over the last seven years, real growth has averaged just one percent at an annual rate in first quarters.”
On the campaign trail, Trump pledged to push US growth to four percent, though his administration now is targeting three percent growth and is banking on the acceleration to pay for sweeping tax cuts.
Critics, however, say such rapid growth is unrealistic and any deep tax cuts, if approved by Congress, are unlikely to pay for themselves.
Though consumer spending was held down by several factors — including a drop in spending on home heating during an unusually warm winter and falling mobile phone plan prices — the new estimate showed a rebound, revising the increase up a half point to 1.1 percent.
Sales of big-ticket manufactured items also were a little stronger while goods exports were revised up sharply, adding 2.1 points to 10.5 percent compared to the final quarter of 2016.
Investments by businesses remained at five-year-record levels but waned slightly in the new numbers, with spending on buildings cut one point to 10.4 percent over the prior three months.
Household spending on services was likewise a little stronger, with healthcare, financial services and insurance all up about two-tenths over last month’s estimate.
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