Economy grew 0.7% in first quarter, data show
Analysts expect greater growth in second quarter.
America’s WASHINGTON — gross domestic product, a broad measure of economic growth, grew by just 0.7 percent in the first three months of the year, according to government data issued Friday morning, an estimate econ- omists say is more likely due to measurement error than Donald Trump’s performance as president.
Most economists had been expecting a lackluster growth report for the first quarter, with analysts surveyed by Reuters predicting the figure would be around 1.2 percent. But some expected more disappointing results, like the Atlanta Federal Reserve, which projected growth of just 0.2 percent.
The report contains the first official estimates of economic growth under Trump and was coinciden- tally released on the 99th day of his new administration. The president and his aides have tried to show demonstrable progress on his chief priorities, including economic issues, before the conclusion of his first 100 days in office.
Weaker growth is partly due to persistent measurement issues, which have caused the government to underestimate growth in the first quarter for many years — and reflected poorly on other presidents in their first quarter in office.
In the fourth quarter of 2016 and the final of former President Obama’s tenure, the economy grew by 2.1 percent, federal economists reported last month.
Most economists expect the figure to rebound in the second quarter. All the same, the disappointing figure suggests a potentially worrying gap between expectations for the new administration and the reality of how the economy is performing.
The administration’s goal of boosting GDP growth to 3 percent is a long way off, the new data show. A rapid pace of economic expansion is crucial for Trump’s broader economic agenda. He plans to aggressively reduce taxes, which could leave the fed- eral government short trillions of dollars in revenue unless the budget is bolstered by strong economic growth.
Surveys show that consumer and business confidence has soared since the election, creating one of the biggest divergences in recent memory between soft data - measurements of how people feel about the economy and their future in it - and the hard data that government statisticians release each month.
Hard data has given more of a mixed picture. In the first two months of the year, the number of jobs added to the U.S. economy surpassed expectations. But the number of new jobs created slumped in March, partly due to a snowstorm that prevented some Americans from working. Some economists worry
about sluggish retail sales, which indicate consumers may be saving rather than spending.
S pending could be restrained further if the Federal Reserve continues with its plan to hike interest rates two more times this year, after already raising rates at its March meeting.