WASHINGTON-Economic growth slowed earlier this year than the government previously reported, as consumers reduced spending and the housing market affected production.
Gross domestic product, a broad measure of goods and services produced in all of EE. The US expanded at a seasonal annual rate and adjusted for inflation of 2% in the first quarter, the Commerce Department reported Thursday. That was weaker than a previous estimate of 2.2% growth.
Consumers spent less on services than previously thought. Purchases of health services by nonprofit organizations and spending on financial services and insurance were all weaker than the government previously reported. The economy also saw less investment in private inventory, mainly in retail inventories.
Even so, investment outside the housing market, such as computer software and research and development, was stronger than previously thought, growing at the fastest rate in three years.
"Although GDP growth in the first quarter was revised lower, and was softer than in the last three quarters of 2017 when growth averaged 2.7%, the economy is in a better condition than the number would indicate. principal, "said PNC chief economist
One possible problem: first-quarter growth has been weaker compared to other quarters in recent years due to problems with the way the government seasonally adjusts economic data. In the longer term, the economy grew 2.8% in the first quarter of the previous year.
The analysis suggests that growth recovered in the second quarter. The consulting firm Macroeconomic Advisers predicted on Wednesday that GDP growth would reach an annual rate of 5.3% in the second quarter, while the projected product of the GDPNow model of the Federal Reserve of Atlanta would grow by 4.5%. The Department of Commerce will publish growth data for the second quarter at the end of July, along with comprehensive historical data reviews.
Economists believe that growth will remain robust during 2018, driven by an ultra-low unemployment rate and steady growth in employment and wages. At the same time, the fiscal review of the end of 2017 could encourage the spending of companies and consumers.
An indicator of the company's earnings, after-tax earnings without valuation of inventories and adjustments of capital consumption, increased by 10.6% adjusted seasonally in the first quarter, above the previous reading that showed an increase of 7.8%. This could indicate the reduction of the federal rate of corporate taxes, which was reduced to 21% from 35%, and other changes in the tax laws may have substantially affected the profits of the companies.
The first quarter saw residential investment as a growth factor. Housing construction and renovations decreased at a revised annual rate of 1.1%. This could be reversed in the second quarter. Housing in the United States begins to rebound last month to the highest level since 2007.
Meanwhile, consumer spending, which accounts for more than two-thirds of total US economic production. UU., Increased at an annual rate of 0.9% last quarter. This signals the retreat of a more solid spending marked during the second half of 2017, which saw a strong holiday shopping season and a wave of hurricane-related purchases, such as replacement cars. A particularly severe winter has also been blamed for the weaker purchases in the first quarter.
"The deceleration in consumer spending in particular can raise an eyebrow, but the softer result should be seen with a good deal of skepticism." said Jim Baird, chief investment officer at Plante Moran Financial Advisors. "It is believed that growth in the second quarter regained momentum."
Personal consumption expenditure, a measure of household spending, increased by 0.6% seasonally adjusted in April compared to the previous month, according to the Department of Commerce. That was the biggest increase in five months, indicating a rebound in spending.
Participations of Francesca
, which sells women's apparel, accessories and household items, saw net sales fall for the first quarter, largely due to less pedestrian traffic in stores and fewer customers who actually shop when they walked in the door. Even so, the company saw the moderate decline in the spring.
"I know there have been several reports, the weather affects companies in [the first quarter]," said Steven Lawrence, Francesca's executive director, in a recent earnings call. "But clearly, you could see it in the seasonal categories, we definitely saw how clothing trends increase as we go through that April period and the weather heats up."
The report also showed that government spending grew to a annual rate of 1.3% in the last quarter, with federal and state spending slowing down on a stronger spending seen at the end of last year.
Net exports docked 0.04 percentage point of the general GDP growth rate in the first quarter. The change in private inventories subtracted 0.01 percentage point. Both categories tend to be volatile from quarter to quarter.
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