The U.S. economy’s first quarter inched closer to respectability, as consumer spending and trade added more to growth than previously reported, Commerce Department data showed Thursday.
Highlights of First-Quarter GDP (Third Estimate)
• Gross domestic product rose at 1.4% annualized rate (forecast and previous estimate were 1.2%)
• Consumer spending, biggest part of the economy, rose 1.1% (forecast and previous estimate were 0.6%)
• Exports grew 7%, revised from 5.8%
Key Takeaways
While the revision was more positive than most analysts anticipated, the report still underlines a relatively weak start to the year, with consumer spending growing at the slowest pace since 2013. Weather and other temporary factors in the period, along with rising wages and salaries, support the idea of a consumer-led rebound in the second quarter. Federal Reserve policy makers raised interest rates earlier this month, seeing the first-quarter slowdown as transitory as the labor market improves further.
The Commerce Department attributed the latest upward revision to spending data for financial services, insurance and health care. Exports of industrial supplies and materials were higher than previously reported, boosting trade’s contribution to expansion in the period.
Analysts estimate the U.S. economy will grow at a 3 percent rate in the April-to-June period, though the slowdown in equipment orders and shipments reported earlier this week raises the risk that business investment will provide less of a boost than anticipated. Cooling automobile sales and a housing sector limited by a scarcity of affordable homes also remain headwinds for the economy this year.
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