US Q1 growth weakest in three years as consumer spending falters

Brittany BishopApr 30, 2017

This might surely has disappointed Trump as he had ambitions to boost the economic growth of US significantly.

Figures released Friday by the U.S. Commerce Department showed GDP increased at a 0.7% annual rate, also as the government cut back on defense spending. The wages and salaries component also increased 0.8 percent in the first three months of the year, the most since the second quarter of 2008.

Economic output often varies widely quarter to quarter, and most economists expect the economy to rebound to a rate of between 3% and 4% growth this spring.

The recent slowdown in economic growth was driven by consumer-focused industries such as retail, accommodation and the sale and fix of vehicles, all of which declined in the first quarter, according to the ONS. This is also largely attributable to good weather with future quarters showing considerably slower growth. "In Q1, United Kingdom services slowed to 0.3 percentpc from 0.8 percentpc the previous quarter, and a broader economic slowdown was slightly less dramatic". And other indicators of compensation haven't been quite as rosy - average hourly earnings in the Labor Department's employment report, for instance, were up 2.7 percent year-over-year in March, little changed from the average over the previous year. The consensus estimate on Wall Street is for 2.8% annualized growth in the second quarter.

The growth was the weakest quarterly performance since the first quarter of 2014, Xinhua news agency reported. Similar to consumer spending, the sharp decline may be an indicator that some of the fourth quarter growth-which added almost one percentage point to GDP-was borrowed from the first quarter.

Normally PCEs drop off a bit in the first quarter of any year, coming after the spending sprees of Q4 holiday seasons.

Retail spending was weaker in the first quarter 2017.

Spending on mining exploration, wells, and drilling rigs swelled at a record pace of 449 percent after growing 23.7 percent in the fourth quarter of 2016.

"Q1 PCE rose a modest 0.3% and contributed a scant 0.23 percentage points to growth", McCarthy said in a note after the release.

In addition to weaker consumer activity, the first-quarter slowdown also reflected a cutback in restocking of store shelves. Michelle Meyer, Chief United States Economist at Bank of America Merrill Lynch, told Times that healthier business investment indicated that the overall economy was performing better than the headline numbers would suggest.

Most economists believe the economy is picking up speed.

"Slower growth of consumer spending and investment uncertainty following the referendum vote are acting as a drag on UK GDP, despite a reasonably buoyant global economy", Andrew Sentence of PwC said. Inventories subtracted 0.93 percentage point from GDP growth. They see growth just above 2 percent this year.

Related Articles:



« Previous article


Popular Pages

Twitter revenue drops despite an increase in number of users
However, despite outdoing Wall Street predictions the businesses' revenue is in decline, decreasing by a total of 8% year-on-year. But the benefit of investing more in that market could take some time to make it to the balance sheet, the company said.

Prominent firm to defend 'Bachelor' star in Iowa crash case
Soules can then be heard counting to himself and telling the dispatcher blood is coming from Mosher's mouth. At the time of the call, Soules revealed Mosher was not conscious and didn't appear to be breathing.

Cowboys target D as expected with Michigan's Taco
Malik McDowell, potential Cowboys first round pick. "He has the arm length that we're trying to get at the right defensive end". Stephen Jones said the Cowboys had first-round grades on three defensive ends but that Charlton was not one of them.

OAS to hold emergency meeting Wednesday on Venezuela crisis
But the opposition was further galvanized when authorities banned senior opposition leader Henrique Capriles from politics. The Caracas gathering was largely peaceful, but Diaz Ortega said there had been four deaths around the country.

Predators' Fiala out of playoffs after breaking leg
The Blues will try to even their second-round playoff series with the Predators on Friday night at Scottrade Center. Four different penalty-induced disadvantages overshadowed the Blues' decent performance against Pekka Rinne.

Militant group: Pakistani ISI using prisoner for propaganda
The officials spoke on condition of anonymity as they were not authorized to speak to media on the record. Khurasani says Pakistan's Inter-Services-Intelligence is using a "prisoner" for propaganda against them.

Canadian Leader Responds To Lumber Tariffs Imposed By The US
In America, the producers typically own their logs and must price and produce according to market conditions. It had brought us all 10 mercifully splinter-free years. "But I claim no expertise in Canadian politics".

Oregon wins distance medley without Cheserek at Penn Relays
The Sooners advanced two relay teams to Saturday's finals in the women's 4x200, and the men's 4x100. I think anything under 63 is good. " Penn Relays is always a fun meet".

Ronaldinho "very happy" for Lionel Messi
After Lionel Messi's dramatic late victor in the visitors' 3-2 win, fans in Blaugrana jerseys could clearly be seen dotted among the Madridistas.

Arkansas executes another inmate
Williams' attorneys briefly stalled the man's execution after they raised concerns about how the prior execution was carried out. Jessie Turnure, from our NBC Affiliate in Little Rock, was on the other side of the glass when Williams took his final breath.