WASHINGTON • Growth in the US economy was slightly slower than previously thought in the first quarter, with new figures yesterday showing consumer spending at its weakest in almost five years.
Based on more comprehensive data, the Commerce Department's updated report also showed business investment and export revenues underperformed in the January-March period.
Gross Domestic Product in the world's largest economy increased by 2 per cent in the first quarter, two-tenths slower than the previous estimate and sharply lower than the 2.9 per cent recorded in the final three months of 2017.
A consensus forecast among analysts had called for the final GDP estimate to remain unchanged at 2.2 per cent.
After-tax corporate profits, juiced by President Donald Trump's sweeping December tax cuts, zoomed 8.7 per cent higher, the largest gain in almost four years.
But personal consumption expenditures, a measure that tracks spending by individuals, grew at a sluggish 0.9 per cent for the quarter, the lowest level since the second quarter of 2013.
But first-quarter growth in recent years has run below trend. And economists expect the second quarter will make up for the difference - perhaps doubling to 4 per cent or more on rising exports, factory orders and capital spending.
Mr Trump has vowed to return the United States to sustained growth of 3 per cent or higher on an annual basis - indeed, the White House is counting on this to pay for the corporate and individual tax cuts.
Economists say that is unrealistic and growth is unlikely to stay that high for long after a decade of recovery an economy already at full steam.
Economist Ian Shepherdson of Pantheon Macroeconomics said the sudden drop in consumer spending was "nothing more than a correction" after the 4 per cent bounce recorded in the wake of 2017's repeat late-summer hurricanes. "In any event, Q1 is now ancient history and Q2 GDP growth is headed for four per cent plus," he said.