1st-quarter growth rate is revised up

The U.S. economy started 2017 with a whimper, but it wasn’t quite as weak as first thought. The government revised up its January-March growth reading to a rate of 1.2% — better than an earlier estimate of 0.7% but well below President Trump’s ambitious growth targets.

Growth in the gross domestic product, the broadest measure of economic health, is down from a 2.1% annual growth rate in the fourth quarter and marks the weakest result in a year, the Commerce Department said Friday.

The upgrade to 1.2% reflected new-found strength in consumer spending, business investment and state and local government spending.

Many economists believe that growth in the current April-June quarter will rebound sharply to above 3%, helped by stronger consumer spending that reflects solid employment gains and an unemployment rate that has fallen to a decade low of 4.4%. Moreover, part of the firstquarter weakness reflected various temporary factors such as unusually warm winter weather.

Paul Ashworth, chief U.S. economist at Capital Economics, said even with the upward revision the revised reading “doesn’t alter the fact that it was another disappointing start to the year.”

But he and other analysts said they were still looking for a better showing in the current quarter.

“Growth is bouncing back in the second quarter,” said Gus Faucher, chief economist at PNC. “Consumer spending continues to expand with job and wage gains, and business investment is picking up, especially for energyrelated industries.”

However, after a spring surge, analysts believe growth will fall back to a level of 2% to 2.5% in the second half of the year — the same modest pace that has been in effect for the almost eight years of this economic recovery, making it the slowest expansion in the post-World War II period.

During the campaign, Trump attacked the economy’s weak growth and blamed it on failed economic policies of the Obama administration.