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03:56:13 PM EDT 6/1/2018
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US economy's growth revised lower as consumer spending slows

Akin Oyedele
May. 30, 2018, 08:33 AM

grocery shoppingJustin Sullivan/Getty

  • The US economy's growth in the first quarter slowed even more than previously reported, a Commerce Department report released on Wednesday showed.
  • Gross domestic product increased at an annualized rate of 2.2%, down from the 2.3% pace initially reported and from 2.9% in the fourth quarter.
  • First-quarter growth tends to be understated compared with the rest of the year because of ongoing issues with how the Commerce Department adjusts for seasonal swings in the economy.

The Commerce Department on Wednesday revised the US economy's growth in the first quarter slightly lower, with consumer spending contributing less than previously reported.

Gross domestic product, the value of every good and service produced within the US, grew at an annualized rate of 2.2%, slowing from 2.9% in the fourth quarter. Economists had forecast that headline GDP would be unrevised at 2.3%, according to Bloomberg.

Consumer spending, the biggest contributor to the economy, slowed after a surge that was partly caused by people replacing property destroyed in the summer hurricanes. Spending grew by 1%, revised down from the 1.1% rate reported in the initial estimate. Residential construction also weighed down growth, but those drags were partly offset by strong business investment.

During most of this recovery, first-quarter growth has tended to undershoot the rest of the year because of seasonal-adjustment issues related to how the Bureau of Economic Analysis adjusts for temporary changes in economic activity.

The Atlanta Fed's GDPNow tracker is penciling in a big rebound for the second quarter, with 4% GDP growth. It could be revised lower as more complete data is received over the next few weeks.

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