The U.S. economy’s first quarter wasn’t so miserable after all, as consumption contributed more to growth and business investment was even stronger than thought, Commerce Department data showed Friday.
While the revisions were more positive than economists generally expected, the report reinforces that 2017 got off to a relatively weak start, a trend that’s plagued the U.S. economy for several first quarters. Still, business investment was even brighter than previously estimated, thanks to fresh data on construction spending and companies’ research and development expenses. Economists and Federal Reserve policy makers are betting on a second-quarter rebound with the consumer leading the way, as Americans remain confident amid steady job growth and the promise of fatter paychecks.
Part of the revision to consumption spending was due to electricity-usage data for February, indicating that heating bills during the unusually warm weather weren’t as low as thought. That drag from low spending on energy is one of the reasons that economists view the first-quarter slowdown as transitory.
Inventories subtracted 1.07 percentage point from growth in January through March, revised from 0.93 percentage point
Net exports added 0.13 percentage point to GDP growth, revised from addition of 0.07 point
Stripping out inventories and trade, two most volatile components of GDP, so-called final sales to domestic purchasers increased at 2.1 percent rate, revised from 1.5 percent
Nonresidential fixed investment, or spending on equipment, structures and intellectual property, rose at 11.4 percent annualized pace, a five-year high, revised from 9.4 percent
Health-care spending revised lower to 0.10 percentage-point contribution to growth, from 0.37 point
Real disposable personal income rose at 1.7 percent pace in first quarter, revised from 1 percent, as fourth-quarter wages and salaries were revised down by $106.2 billion
Corporate profits rose 3.7 percent from a year earlier, the third straight gain
U.S. economy will grow at 3 percent rate in the second quarter and 2.2 percent for the year, according to median forecasts in Bloomberg surveys of economists earlier this month
GDP report is the second of three estimates before annual revisions in July