Economic growth slowed in the first quarter of 2017, the Bureau of Economic Analysis reported Friday, as gross domestic product grew at a 0.7 percent annual rate, adjusted for inflation.
That was a slowdown from the 2.1 percent rate in the last quarter of 2016, and below forecasters’ expectations of around 1 percent growth. In fact, it was the weakest quarter since the first quarter of 2014, thanks largely to a major dropoff in consumer spending.
The weak quarter encompassed the end of President Obama’s tenure and two-plus months of President Trump’s. Trump has called for accelerating economic growth, and recently his administration has set a target of 3 percent annual GDP growth on a sustained basis.
While Friday’s report showed growth well below that rate, analysts had cautioned from reading too much into it. In recent years, readings of growth in the first quarter have averaged just around 1 percent, raising the possibility that there is a problem with the calculations the bureau makes to adjust for seasonal variations. The agency has acknowledged the issue.
For 2017, very slow consumer spending was the main culprit. It grew at just a 0.3 percent annual rate, according to Friday’s release, the smallest in years.
Yet many economists expect growth to return to trend in the second quarter. In recent years, the economy has expanded at around a 2 percent pace.
Other data from Friday’s report suggests that the U.S. remains on that same course. For example, total sales to private purchasers, a measure that strips out government purchases and foreign purchases to give a sense of private sector health, grew at a 2.2 percent clip, in line with recent years.
And recent economic data from other sources has been encouraging, even if not quite as strong as would be needed to hit Trump’s growth target.
The number of people receiving unemployment insurance benefits, for instance, has been running at the lowest level in 17 years.
