U.S. economic growth cooled last quarter as consumers pulled back following outsize spending in the prior period, though solid business investment cushioned some of the weakness.
Gross domestic product, the value of all goods and services produced in the nation, rose at a 2.3 percent annualized rate after climbing 2.9 percent in the prior quarter, the Commerce Department reported Friday. The median forecast of economists surveyed by Bloomberg called for a 2 percent gain. Consumer spending, the biggest part of the economy, rose 1.1 percent, matching estimates and marking the smallest gain since 2013.
While GDP growth was the best for any January-March period since 2015, it’s a step down from three quarters of GDP growth above or near 3 percent, and a reminder that the first quarter remains plagued by data quirks. Analysts expect a rebound as tax cuts take hold amid a strong job market, though tailwinds such as low inflation and borrowing costs are starting to dissipate, and trade tensions represent a headwind.
A separate Labor Department report Friday showed that a broad measure of employee compensation rose more than expected in the first quarter, adding to signs that the tight job market is supporting a pickup in pay.
The 2.3 percent pace of GDP growth is still faster than what the Federal Reserve sees as the economy’s long-term potential rate, and officials have previously said they view the first-quarter slowdown as transitory, with the economy poised to reach a milestone in May -- the second-longest expansion on record. Investors expect the central bank to raise interest rates in June for the second time this year.
Source : Bloomberg