The U.S. economy slowed less than initially thought in the first quarter, but Reuters reports there are signs it could struggle to rebound sharply in the second quarter amid slowing business investment and moderate consumer spending.
The Commerce Department says gross domestic product increased at a 1.2% annual rate instead of the 0.7% pace reported last month. The new report is the second GDP estimate for the first three months of the year.
“The second estimate paints a better picture about the degree of slowing in activity at the start of the year, but the main concern about soft growth in private consumption remains,” says Michael Gapen, chief economist at Barclays in New York.
That was the worst performance since the first quarter of 2016 and followed a 2.1% rate of expansion in the fourth quarter. The government revised up its initial estimate of consumer spending growth, but adds inventory investment was far smaller than previously reported.
The first-quarter weakness is a blow to President Donald Trump’s ambitious goal to sharply boost economic growth rates. During the 2016 presidential campaign Trump had vowed to lift annual GDP growth to 4%, though administration officials now see 3% as more realistic.
