The economy grew at a 1.1 percent annual rate in the first quarter, the Bureau of Economic Analysis reported Tuesday in its final estimate of gross domestic product.
The final revision placed economic output, adjusted for inflation, significantly higher than the initially estimated 0.5 percent rate, making the first quarter’s weak growth slightly less of a disappointment than initially thought.
Nevertheless, including Tuesday’s report, economic growth has slowed in four consecutive quarters.
Upward revisions in exports and business investment accounted for the final tally being marked up to 1.1 percent.
Some details of the report hinted at resilience in the economy, despite the headwinds from abroad that have helped hold down growth.
Most notably, one statistic indicated that the weak 1.1 percent reading might be more attributable to miscounting than to slowing growth. Gross domestic income, a measure of output based on income rather than spending, grew at nearly 3 percent. Averaging out gross domestic income and gross domestic product, two measures that conceptually should be the same, puts first-quarter output growth at 2 percent.
Nevertheless, other parts of the GDP figures could give policymakers concerns. Specifically, consumer spending slowed to just a 1.5 percent annual rate, the slowest rate in two years and the fourth straight decline. Federal Reserve officials have looked to consumer spending as a sign that the economy remains on track in recent months.
Overall, sales to the private sector, a metric that strips out sales to other countries or to the government to provide a gauge of the strength of domestic demand for goods and services, slowed to just a 1.1 percent rate, the slowest since mid-2012.
While private-sector forecasters have projected that that the disappointing first quarter is a one-off, attributable in part to seasonal quirks and to the effects of a stronger dollar crimping exports, and that growth will rebound to around 2.5 percent in the secound quarter, the final GDP report will give policymakers some concerns, and make it highly unlikely that growth ends the year above 3 percent.
The market volatility kicked off by last week’s “Brexit” vote is another reason for forecasters to exercise caution. “Greater uncertainty about the prospects for global growth and increased financial market volatility could make U.S. businesses more cautious in hiring and investing, and could make consumers less willing to spend,” PNC economist Gus Faucher wrote in response to Tuesday’s numbers.
