United States sees Q1 growth slow
Print Edition
ECONOMIC growth in the United States slowed in the first quarter, though not as sharply as initially thought, as a surge in home building and steady inventory accumulation partially offset the impact of modest consumer spending and soft business investment.
Gross domestic product rose 0.8 percent year on year, as opposed to the 0.5 percent pace reported last month, the Commerce Department said yesterday in its second GDP estimate for the January-March period.
That latest figure was the weakest growth since the first quarter of last year.
The upward revision reflected a smaller drag from trade than previously estimated.
The government also reported a rebound in after-tax corporate profits, which increased at a 0.6 percent rate in the first quarter after plunging at an 8.4 percent pace in the fourth quarter.
Income growth for the first three months also was revised higher.
As a result, the economy grew at a much faster 2.2 percent rate when measured from the income side, after expanding at a 1.9 percent pace in the fourth quarter.
The economy has been hurt by a strong dollar and sluggish global demand, which have eroded export growth. It has also been squeezed by lower oil prices, which have undercut profits of oil field companies like Schlumberger and Halliburton, forcing them to slash spending on equipment.
Economists said also that they believe the model used by the government to strip out seasonal patterns from data is not fully accomplishing its goal despite steps last year to address the problem.
Residual seasonality has plagued first-quarter GDP data, with growth underperforming in five of the last six years since the beginning of the economic recovery in 2009.
There are some signs that the economy regained momentum early in the second quarter, with retail sales, goods exports, industrial production, housing starts and home sales surging in April.
The Atlanta Federal Reserve is currently estimating second-quarter GDP rising at a 2.9 percent rate. But the ongoing high level of inventories poses a downside risk to that forecast.
Economists polled by Reuters had expected first-quarter GDP growth would be revised up to a 0.9 percent rate. The economy grew at a 1.4 percent rate in the fourth quarter.
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