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WASHINGTON – Economic growth has been slower at the beginning of this year than the government had previously announced, as consumers reduced spending and the housing market weighed on production.
Gross Domestic Product, a broad measure of goods and services produced across the United States, rose at a seasonally adjusted annual rate and corrected by 2% in the first quarter, the Commerce Department reported on Thursday. . This was lower than an earlier estimate of 2.2% growth.
Consumers spent less on services than previously thought. Health care purchases by non-profit organizations and expenditures in financial and insurance services were all lower than the previously reported government. Investments outside the housing market, such as computer software and research and development, have been stronger than expected, with the fastest growth in about three years. "Although GDP growth in the first quarter has been revised downwards and it has been more moderate than in the last three quarters of 2017 when growth averaged 2.7%. , the economy is in much better condition chief economist
Gus Faucher.
A potential problem: First-quarter growth has been weaker than other quarters in recent years due to problems with the way the government adjusts the economic data seasonally. In the longer term, the economy grew 2.8% in the first quarter compared to the previous year
. According to the badyzes, growth accelerated in the second quarter. According to forecasts by macroeconomic advisers on Wednesday, projected GDP growth would reach an annual rate of 5.3% in the second quarter, while the projected output of the GDPNow model of the Federal Reserve Bank of Atlanta would increase by 4.5 %. The Ministry of Commerce will release growth data in the second quarter at the end of July, as well as full revisions to historical data.
Economists believe that growth will remain robust throughout 2018, supported by an ultralow unemployment rate and stable wage growth. At the same time, the end-2017 tax review could encourage business and consumer spending.
An badessment of corporate profits, after-tax profits with no inventory valuation and capital consumption adjustments, increased by 10.6% in the first quarter above the previous reading which showed an increase of 7, 8%. This could mean the new federal corporate tax rate, which goes from 35% to 21%, and other changes in tax law may have substantially affected corporate results.
The first quarter saw residential investment weigh on growth. Residential construction and renovations declined at a revised annual rate of 1.1%. This could reverse in the second quarter. US housing starts rebounded last month to reach the highest level since 2007.
Meanwhile, consumer spending, which accounts for more than two-thirds of total US economic output, grew at an annual rate of 0.9%. This indicates a decline in more robust spending started in the second half of 2017, which has seen a strong season of holiday shopping and a wave of hurricane-related purchases, such as replacement cars. A particularly harsh winter was also attributed to some of the lowest purchases in the first quarter.
"Slowing consumer spending in particular may raise an eyebrow, but the weaker outcome should be viewed with a good deal of skepticism," said Jim Baird, investment director at Plante Moran Financial Advisors. "Growth in the second quarter is widely seen to have picked up momentum."
Personal consumption expenditure, a measure of household spending, rose 0.6% seasonally adjusted in April from the previous month, according to the Commerce Department. This was the largest increase in five months, indicating a rebound in spending.
Francesca's Holdings
Corp.
, which sells women's clothing, accessories and household items, saw its net sales decrease in the first quarter, mainly due to the decline in the number of pedestrians in stores and fewer customers shopping when They go through the door. "I know that there have been several reports on the impact of weather on business in [the first quarter]," said Steven Lawrence, Francesca's general manager, during a recent call of funds. "But clearly, you could see it in the seasonal categories.We have clearly seen that clothing trends intensified in April and that the weather warmed up."
The report shows also that government spending increased by 1.3% in the last quarter, as federal and state spending slowing Net spending decreased by 0.04 percentage points from the first quarter overall GDP growth rate. change in private stocks was subtracted by 0.01 percentage point.The two categories tend to be volatile from one quarter to the next.
Write to Sharon Nunn to [email protected]
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