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USA first-quarter GDP growth revised up to 1.4 percent

Real GDP for the First quarter of 2017 grew at a seasonally adjusted annual rate of 1.4%, according to the Bureau of Economic Analysis’s revised estimate, up slightly from the second estimate of 1.2%.Though consumer spending was held down by several factors – including a drop in spending on home heating during an unusually warm winter and falling mobile phone plan prices – the new estimate showed a rebound, revising the increase up a half point to 1.1 percent.The higher growth rate was mostly driven by unexpectedly higher consumer spending and a hike in exports. With the third estimate for the first quarter, personal consumption expenditures (PCE) and exports increased more than previously estimated, but the general picture of economic growth remains the same (see “Updates to GDP” on page 2).Business spending on equipment was revised to show it increasing at a 7.8 percent rate in the January-March period rather than the 7.2 percent previously estimated.Despite the upward revision to GDP, the Trump administration’s stated target of swiftly boosting annual US economic growth to 3 percent remains a challenge.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. Mr Faucher forecasts growth around 2.2% for the year. While the number of Americans filing for unemployment benefits edged up last week, the underlying trend remained consistent with a tight labor market. Imports were also revised slightly higher from 3.8 percent to 4.0 percent thanks to an upward revision in goods from 4.2 percent to 4.4 percent and an increase in services from 1.9 percent to 2.4 percent in the final Q1 GDP report. The unemployment rate fell to a 16-year low in May. Inventory investment rose at a $49.6 billion rate in the fourth quarter of past year.”The main surprise in Q1 was a larger than expected upward revision to consumption”, Ted Wieseman, an economist at Morgan Stanley, told Reuters. Inventories gained just $2.6 billion in Q1, the smallest quarterly build since Q2 2016.