US consumer spending growth slows but economy is in line

City A.M. Reporter
THE US economy’s growth slowed as expected in the first quarter, but a less robust pace of consumer spending and export growth than previously estimated could dampen the economic outlook for the current period.

American GDP increased at a 1.9 per cent annual rate, the US Commerce Department said in its final reading yesterday, unchanged from its previous estimate made last month. That was in line with economists’ expectations.

However, when measured from the income side, the economy grew at a 3.1 per cent pace in the first quarter, up from 2.6 per cent in the previous quarter.

The tepid first-quarter pace of GDP growth was a step-down from the October to December period’s three per cent rate.

It also reflected a slightly less sturdy accumulation of inventories by businesses and slower pace of investment in equipment and software than previously estimated.

Consumer spending, which accounts for about 70 per cent of US economic activity, increased at a 2.5 per cent rate in the first quarter, rather than the previously reported 2.7 per cent pace.

The drag from the revisions to consumer spending, equipment and software, exports and inventory accumulation was offset by upward revisions to investment in building projects.