Annualized GDP growth revised up to 1.4% from 1.2%
The U.S. economy slowed less sharply in the first quarter than initially estimated due to unexpectedly higher consumer spending and a jump in exports, the Commerce Department said.
The revision was unexpected and gave a slightly more encouraging outlook for growth this year. Gross domestic product increased at a 1.4 percent annual rate instead of the 1.2 percent pace reported last month, the Commerce Department said in its final assessment for the period. But that was still the worst performance since the second quarter of last year.
The economy tends to grow more slowly in the first quarter than in the rest of the year due to perennial issues with calculating the data.
Commerce said consumer spending, which accounts for more than two-thirds of U.S. economic activity, was largely responsible for the revision. It rose at a 1.1 percent rate, the weakest reading since the second quarter of 2013 but almost double the 0.6 percent reported last month.
Despite the upward revision to GDP, the Trump administration’s stated target of swiftly boosting annual U.S. economic growth to 3 percent remains a challenge.
A sustained average growth rate of 3 percent has not been achieved in the U.S. since the 1990s. The economy has grown an average 2 percent since 2000 and it expanded only 1.6 percent in 2016, which was the weakest growth in five years.
President Trump’s economic program of tax cuts, regulatory roll-backs and infrastructure spending has yet to get off the ground five months into his presidency.
Details of the White House’s tax plan remain sparse as Trump advisers attempt to win over fiscally conservative Republicans in Congress who want any changes to ultimately be revenue-neutral.
Initial signs that economic growth re-accelerated sharply in the second quarter have also faltered in the face of recent disappointing data on retail sales, manufacturing production and inflation. Housing data has also been mixed. Most economists still expect GDP growth to accelerate to 3 percent or just below in the second quarter, however.
But other data Thursday showed the job market was still flashing a green light.
The Labor Department reported that the number of Americans filing for unemployment benefits last week rose slightly, but the underlying trend remained consistent with a tight labor market. The unemployment rate fell to a 16-year low in May.
U.S. exporters also flexed more muscle in the first quarter. Exports for the period grew 7 percent on the year rather than the 5.8 originally reported. And business spending on equipment was revised to show an increase of 7.8 percent in the January-March period rather than the 7.2 percent previously estimated.