WASHINGTON • United States economic growth accelerated by more than expected in the first quarter on a big boost from inventories and trade that offset a slowdown in consumer spending, bolstering hopes that growth is stabilising after its recent soft patch.
Gross domestic product expanded at a 3.2 per cent annualised rate in the January-March period, according to Commerce Department data Friday that topped all forecasts in a Bloomberg survey calling for 2.3 per cent growth.
That followed a 2.2 per cent advance in the prior three months.
But underlying demand was weaker than the headline number indicated. Consumer spending, the biggest part of the economy, rose a slightly-above-forecast 1.2 per cent, while business investment cooled.
A Federal Reserve-preferred inflation measure, the personal consumption expenditures price index excluding food and energy, slowed to 1.3 per cent, well below policymakers' 2 per cent objective. Even so, the data showing faster growth and tame inflation helped push US stock futures higher and Treasury yields lower yesterday.
While 3.2 per cent is a "great number," consumer spending "has to get stronger for the economy to remain in an expansion," said Mr Michael Gapen, chief US economist at Barclays. "We think it will, but it's not a silver lining."