The U.S. economy grew at a 1.4 percent inflation-adjusted annual rate in the first quarter, according to the final revision of gross domestic product figures released by the Bureau of Economic Analysis Thursday.
With Friday’s revision, it’s official that economic growth was a disappointment in the period that spanned the end of Barack Obama’s presidency and began Donald Trump’s, but significantly better than it was first estimated to be.
Originally, GDP was estimated to be just 0.7 percent for the quarter. The bureau then revised that number up to 1.2 percent, and finally to 1.4 percent. The final revision took into account stronger consumer spending and exports than first recorded.
Most indications are that the weak first quarter was a one-off event, and that output growth is set to pick up in the quarters ahead.
In fact, gross domestic product growth is likely to rebound to around 3 percent in the second quarter, according to a forecast from the Federal Reserve Bank of Atlanta produced before Thursday’s report. Fed officials projected this month that growth would wind up at 2.2 percent on the year, in line with recent years.
The clearest sign that the economic recovery still has momentum comes from the jobs market. At 4.3 percent, the unemployment rate is the lowest it has been since 2001, and job growth in recent months has been more than strong enough to keep with population growth and keep unemployment headed down. Meanwhile, extremely low numbers of claims for unemployment benefits suggest that job creation is going to hold up for the near term at least.
Nevertheless, there has been a markdown in expectations from just a few months ago, when most economists held out hope for a jump to around 4 percent growth in the second quarter. And some signs from Thursday’s report suggest that the topline 1.4 percent number might overstate the strength of the economy. For instance, the average of gross domestic product growth and gross domestic income, which measures output by income rather tha purchases, was lower at 1.2 percent.
President Trump has pledged to accelerate gross domestic product growth to a 3 percent rate and keep it there over the course of years. Administration officials have said that that acceleration in growth won’t happen for several years, until the president’s tax reform and regulatory reforms are put in place. Many economists see a sustained 3 percent growth rate is out of reach, given slowing U.S. population growth.
