Economic growth upgraded to 1.4 percent
WASHINGTON — The U.S. economy got off to a lackluster start during the first three months of 2017, though it enjoyed more momentum than earlier estimates indicated.
The Commerce Department said Thursday that gross domestic product, the broadest measure of economic health, grew at an annual rate of 1.4 percent in the first quarter — better than a previous estimate of 1.2 percent and double the initial estimate of 0.7 percent. The upgrade reflects new-found strength in consumer spending and exports.
The result is weaker than 2.1 percent growth in the fourth quarter and matches the growth rate recorded in the second quarter of 2016. It is still well below President Donald Trump’s ambitious target of the economy growing at more than 3 percent.
Analysts expect growth to accelerate in the second quarter, fueled by solid hiring and an uptick in consumer spending. Estimates from the Atlanta Federal Reserve expect that the economy expanded at an annual pace of 2.9 percent during the April-June quarter.
Despite the GDP upgrade, Wall Street investors Thursday appeared more focused on the possibility of higher interest rates following recent remarks from the president of the European Central Bank and the governor of the Bank of England.
Investors shifted out of growth sectors, like technology, into value stocks such as banks as they bet central bankers may be ready to lift rates as did the U.S. Federal Reserve earlier this month.
The steep slide in technology companies pulled U.S. stocks lower, erasing gains from the previous day.
Investors also sold bigdividend stocks as bond yields rose. Banks and energy stocks bucked the broader market decline. Crude oil prices closed higher for the sixth straight day.