US economy suffers slightly slower growth in Q1

GROWTH in the US economy was slightly slower than previously thought in the first quarter, with new figures yesterday showing consumer spending was the weakest in almost five years.

Based on more comprehensive data, the Commerce Department’s updated report also showed business investment and export revenues underperformed in the January-March period.

The gross domestic product in the world’s largest economy rose by two percent in the first quarter, two tenths slower than the previous estimate and sharply lower than the 2.9 percent recorded in the final three months of 2017.

A consensus forecast among analysts had called for the final GDP estimate to remain flat at 2.2 percent.

After-tax corporate profits, juiced by President Donald Trump’s sweeping December tax cuts, zoomed 8.7 percent higher, the largest gain in almost four years.

But personal consumption expenditure, a measure that tracks spending by individuals, grew at a sluggish 0.9 percent for the quarter, the lowest level since the second quarter of 2013.

But first quarter growth in recent years has run below trend. And economists expect the second quarter will make up for the difference — perhaps doubling to four percent or more on rising exports, factory orders, capital spending.

Trump has vowed to return the United States to sustained growth of three percent or higher on an annual basis — indeed, the White House is counting on this to pay for the corporate and individual tax cuts.

Economists say that is unrealistic and growth is unlikely to stay that high for long after a decade of recovery for an economy already at full steam.

Economist Ian Shepherdson of Pantheon Macroeconomics said the sudden drop in consumer spending was “nothing more than a correction” after the four percent bounce recorded in the wake of 2017’s repeat late-summer hurricanes.