US economic growth softens

WASHINGTON: The US economy slowed less than initially thought in the first quarter, but there are signs it could struggle to rebound sharply in the second quarter amid slowing business investment and moderate consumer spending.

Gross domestic product (GDP) increased at a 1.2 per cent annual rate instead of the 0.7 per cent pace reported last month, the Commerce Department said on Friday in its second GDP estimate for the first three months of the year.

“The second estimate paints a better picture about the degree of slowing in activity at the start of the year, but the main concern about soft growth in private consumption remains,” said Michael Gapen, chief economist at Barclays in New York.

That was the worst performance since the first quarter of 2016 and followed a 2.1 per cent rate of expansion in the fourth quarter. The government revised up its initial estimate of consumer spending growth, but said inventory investment was far smaller than previously reported. The first-quarter weakness is a blow to President Donald Trump’s ambitious goal to sharply boost economic growth rates.

During the 2016 presidential campaign Trump had vowed to lift annual GDP growth to 4 per cent, though administration officials now see 3 per cent as more realistic. Trump has proposed a range of measures to spur faster economic growth, including corporate and individual tax cuts.