U.S. first-quarter GDP
growth revised up to 1.4 percent
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[June 29, 2017]
By Lindsay Dunsmuir
WASHINGTON, June 29 (Reuters) - The U.S.
economy slowed less sharply in the first quarter than initially
estimated due to unexpectedly higher consumer spending and a bigger jump
Gross domestic product increased at a 1.4 percent annual rate instead of
the 1.2 percent pace reported last month, the Commerce Department said
in its final assessment on Thursday.
It was still the slowest growth rate since the second quarter of last
year. Economists polled by Reuters had expected GDP growth to remain
unchanged at a 1.2 percent rate.
GDP for the January-March period tends to underperform relative to the
rest of the year due to perennial issues with the calculation of the
data the government has said it is working to resolve.
First-quarter economic growth was boosted by an upward revision to
consumer spending, which accounts for more than two-thirds of U.S.
economic activity. Consumer spending rose at a 1.1 percent rate instead
of the previously reported 0.6 percent pace. It was still the slowest
pace since the second quarter of 2013.
Despite the upward revision, the Trump administration's stated target of
swiftly boosting U.S. growth to 3 percent remains a challenge.
A sustained average of 3 percent growth has not been seen since the
1990s. Since 2000, the U.S. economy has grown at an average 2 percent
rate. The U.S. economy expanded 1.6 percent in 2016, the lowest rate in
President Donald Trump's economic program of tax cuts, regulatory
rollbacks and infrastructure spending has yet to get off the ground five
months into his presidency.
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An H&M store has sale signs in the window in New York City, U.S.,
August 11, 2016. Picture taken August 11, 2016. REUTERS/Joe White
Initial signs that economic growth re-accelerated sharply in the second quarter
have also faltered with recent disappointing data on retail sales, manufacturing
production and inflation. Housing data has also been mixed. The Atlanta Federal
Reserve currently forecasts annualized GDP growth of 2.9 percent in the second
Exports in the first quarter were revised to show a gain of 7.0 percent from the
previously reported 5.8 percent.
Business spending on equipment was revised to show it increasing at a 7.8
percent rate in the January-March period rather than the 7.2 percent previously
Businesses accumulated inventories at a rate of $2.6 billion in the first
quarter, rather than the $4.3 billion reported last month. Inventory investment
rose at a $49.6 billion rate in the fourth quarter of last year.
Inventories subtracted 1.11 percentage point from GDP growth instead of the 1.07
percentage point previously reported.
The government also reported that corporate profits after tax with inventory
valuation and capital consumption adjustments fell at an annual rate of 2.7
percent in the first quarter after rising at a 2.3 percent pace in the prior
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