USA economic growth slowed in 1st quarter

Job seekers and recruiters gather at Tech Fair in Los Angeles

Consumer spending, which accounts for more than two-thirds of the economy, eased to 1.1% - the slowest pace since Q2 2013 - after spending grew by 4% in the previous quarter.

The slowdown in consumer spending in the first quarter offset more positive developments such as continued momentum in business investment and a rise in US exports.

Growth slowed less than most forecasters expected and beat the first quarters of 2016 (0.6%) and 2017 (1.2%).

In CBO's (Congressional Budget Office) projections, the growth of real GDP exceeds the growth of real potential output over the next two years, putting upward pressure on inflation and interest rates.

But a jump in wage growth and an acceleration in inflation in the first quarter will attract attention when Fed officials meet next Tuesday and Wednesday. Goods spending declined 1.1 percent at the annual rate in the first quarter, pulling back from the 7.8 percent gain in the fourth quarter (the strongest quarterly gain in almost 12 years).

"Earnings have stabilised, and the benefits of last year's tax reforms are starting to materialise, though the actual spending of money will take time", Curtin added.

Paul Ashworth, chief USA economist at Capital Economics, said the latest GDP figures were "something of a disappointment since the tax cuts should have provided an immediate boost".

Minutes of the March 20-21 meeting published earlier this month showed policymakers "expected that the first-quarter softness would be transitory", citing "residual seasonality in the data, and more generally to strong economic fundamentals". The question itself is important - Nick Timiraos of The Wall Street Journal tweeted that this "disagreement matters because you end up with large deficits if Trump is wrong" - but one report isn't going to settle the issue.

The year is off to a sluggish start for the US economy - and a decline in spending on clothing and footwear is partly to blame.

Higher federal government spending also will make its mark with O'Sullivan expecting a second-quarter rebound to an annual rate of 3.7 percent.

A separate report Friday found that USA private sector workers saw their wages go up 1 percent in the first quarter, the biggest quarterly gain in 11 years, a sign that the tight job market is beginning to lift wages.

The biggest driver of the drop is what has been fueling growth for years - personal consumption expenditures (PCE), or more colloquially, consumer spending. The cooling in equipment investment comes as the stimulus from a recovery in commodity prices is fading.

Residential investment was also flat in the first three months of the year, possibly due to winter storms and higher short-term interest rates, according to analysts. Moving forward, real GDP should grow by roughly 3 percent in 2018, which would be the strongest growth rate since 2005.

The Trump administration has promised 3 percent GDP growth or better, due in large part to the tax cuts that were passed late previous year. His goal was derailed in the first three months as consumers trimmed spending.

After adjusting for inflation, final sales to domestic purchasers - which strip out inventories and trade - rose at a 1.6 percent pace, the slowest in two years, after a 4.5 percent advance that was the fastest since 2010.

Related News:

  • Jamie Redknapp: Why Alexis Sanchez's struggles at Man United hasn't surprised me

    While that is impressive, United are still far far behind the team on the other side of town and De Gea knows it. Manchester United made a big move by letting Zlatan Ibrahimovic go after his struggles with fitness this year.
    Syracuse University Permanently Expels Theta Tau Fraternity

    Syracuse University Permanently Expels Theta Tau Fraternity

    Maldonado said the university will not release the videos. "By the end of this weekend , DPS will begin recommending charges". They will be providing an update on the status of the "investigative, student judicial, and disciplinary processes".
    Arsenal fans respond to Theo Walcott's tweet about Arsene Wenger

    Arsenal fans respond to Theo Walcott's tweet about Arsene Wenger

    In accordance with Arsenal values and our respect for this man, we haven't had any discussions around that. Rodgers would be the flawless man to keep the outrage going, despite you know, being a decent manager.
  • Kid confidently calls 'game' before LeBron James hits buzzer-beater

    Kid confidently calls 'game' before LeBron James hits buzzer-beater

    Luckily, James' efficiency and them going 26-of-27 from the free-throw stripe saved them in this one, along with their defense. James had enough to worry about with the Pacers that he didn't want to discuss close friend Dwyane Wade's future.
    Nazara announces second mobile cricket game with RCB

    Nazara announces second mobile cricket game with RCB

    The 34-year-old who had struggled for runs in the last two matches was relieved to score some runs and win the game for his team. De Villiers is due a big score, and it could well come against a bowling attack that doesn't possess any firepower.
    Trump confident his lawyer Cohen won't betray him

    Trump confident his lawyer Cohen won't betray him

    Politico published a similar story Thursday which mentioned that those close to Trump are concerned that Cohen might " flip ". Although Trump didn't name names, he said that one of the Times' sources was a "drunk/drugged up loser who hates Michael".
  • Swedish FA: 'Zlatan Ibrahimovic will not be in Russian Federation  with Sweden'

    Swedish FA: 'Zlatan Ibrahimovic will not be in Russian Federation with Sweden'

    This statement immediately responded coach Janne Andersson of Sweden , who said that the services of a veteran does not need. Ibrahimovic retired from worldwide soccer in 2016 after scoring a national record of 62 goals in 116 games.

    $1.44 EPS Expected for EQT Midstream Partners, LP (EQM)

    As per Wednesday, April 11, the company rating was maintained by Mizuho. "Buy" rating has 5, "Sell" are 1, while 1 are "Hold". The ideal time to sell a stock is usually when it is trading higher than its target price range or during overheated markets.
    Nicaragua: 20 killed in police-protesters clash

    Nicaragua: 20 killed in police-protesters clash

    Soldiers armed with rifles stood guard at public offices in Managua , as well as in the northern city of Esteli. Angel Gahona was talking about a broken ATM machine when a gunshot is heard and his body slumps to the ground.
  • Patton Oswalt credits late wife Michelle in Golden State Killer case

    Patton Oswalt credits late wife Michelle in Golden State Killer case

    McNamara had questions because she knew the Golden State Killer's freedom would eventually come to an end. Candace Creech says she started crying from the shock of hearing the news of DeAngelo's arrest.
    AT&T rolls out '5G Evolution' in more than 100 new markets

    AT&T rolls out '5G Evolution' in more than 100 new markets

    The carrier said that it is slowly shifting towards real 5G , but it needs to upgrade its cell towers first to make that happen. That means there is a good chance you will see 5G Evolution advertised in or near where you live in the coming months.
    ZTE Calls US Sanctions 'Unacceptable,' Complains of Unfair Treatment

    ZTE Calls US Sanctions 'Unacceptable,' Complains of Unfair Treatment

    Reuters reports that ZTE can appeal to the Bureau of Industry and Security, the same agency that issued the ban . It would also handicap the mainland's ability to build the world's largest 5G network by the end of this decade.


Most liked

Instant analysis of the Steelers pick of Mason Rudolph
They're already familiar with Heinz Field. "I knew it as soon as I got selected, like, I can't wait, it'll be fun", Rudolph said. Rudolph said he sent offensive coordinator Randy Fichtner a text a few days ago reminding to think about him come draft night.

Deutsche Bank cuts more to fight earnings plunge
Paul Achleitner, now Deutsche Bank's supervisory board chairman, advised it on the purchase while at Goldman Sachs Group Inc. HSBC downgraded Deutsche Bank from a "buy" rating to a "hold" rating in a report on Monday, January 8th.

Ford Will Stop Producing Most Sedans For North American Market
The automaker says it made $1.74 billion, or 43 cents per share, compared with $1.59 billion, or 40 cents per share a year ago. Ford took steps on Wednesday to bolster its operations in China, a key overseas market, where sales have been flagging.

Flyers hope to mature, learn from playoff mistakes
Now Philadelphia has to do it again at home , a place where the Penguins outscored the Flyers 10-1 while rolling in Games 3 and 4. Then, Jake Guenztel went on a scoring rampage, scoring three-in-a-row, pushing the Penguins into a 7-4 lead in the 3rd period.

Playoff Delly returns for surging Milwaukee Bucks
Boston won, so there's not much reason to question Stevens' decision of benching Jayson Tatum down the stretch in Game 5. Playoff Delly is an actual thing, and he's arrived just in the knick of time for this Milwaukee Bucks squad.

DOJ is investigating Huawei for violating Iran sanctions
US authorities have subpoenaed Huawei seeking information related to possible export and sanctions violations, two sources said. Ciena and Infinera, of course, compete with both Huawei and ZTE in global markets (except China ).

Allison Mack freed to parents on $5 million bail
Mack is credited in publicly available materials with co-creating a Nxivm program, called The Source, which recruited actors. After a while, she began to recruit other women to join the group that masqueraded as a club that helped and mentored women.

FA apologise after mocking Kane with Smalling tweet
Following the fallout from the tweet, an FA spokesperson has said: "We have written to both clubs to apologise for any offence caused".

Mitt Romney faces Senate major in Utah after state GOP conference setback
Kennedy edged Romney in the vote among convention delegates, 51 percent to 49 percent, according to The Salt Lake Tribune . But the 2 men have shown fresh indications of burying the hatchet, also Trump's approval has been accepted by Romney.

Macron to make state visit to US
Macron will arrive in Washington, D.C., on Monday for the first official state visit of President Trump's presidency. Trump himself told Macron their "friendship" was "unbreakable" during his trip to Paris last July.

Mohamed Salah, Liverpool's Egyptian King, crowned PFA player of the year
Salah will now be raring to go for when his side host Roma in the first leg of their Champions League semi-final on Tuesday (7.45pm).

Cueto improves league-leading ERA, Belt powers Giants to first series win
However, Belt had another at-bat in the game that was just as significant as any of the hits, even though he made an out. Cueto induced a groundball from Justin Upton, but a misplay by Brandon Crawford allowed the baserunners to reach safely.

Fayetteville High School Students March as Part of National School Walkout
Minnesota student leaders aimed to take a broader focus than Friday's national walkouts, which centered on school violence. Staff from each school also went outside and watched over the students.

McKayla Maroney Claims Doctor Larry Nassar Abused Her 'Hundreds' of Times
Engler, a former MI governor, was hired to lead MSU on a temporary basis after the resignation of Lou Anna Simon in January. The press conference was held at noon CST at the law firm's office in Houston, Texas.

As Trump-Kim summit takes shape, possible outcomes vary wildly
South Korea's presidential office says working-level officials from both sides tested the hotline on Friday afternoon. Amid this process of approach, Kim has planned to dialogue in May or June next with U.S.