US GDP Growth Revised Down To 2.2 Percent In Q1

The U.S. economy grew at a weaker 2.2 percent annual rate in the first three months of the year, as consumers and businesses slowed their spending.

Growth in the gross domestic product came in slightly below the first estimate last month of 2.3 percent in the January to March period, the Commerce Department reported on Wednesday.

The biggest factor in the downward revision was less inventory building by businesses, which shaved 0.3 percentage points off growth. But GDP is expected to strengthen to a growth rate of about 3 percent in the April to June quarter.

Consumer spending, which accounts for 70 percent of economic activity, slowed more than previously thought to an annual growth rate of just 1 percent. It was the worst showing in nearly five years. The consumer slowdown had been expected given a surge in spending for cars and other big-ticket items in the fourth quarter. Offsetting some of the weakness was more strength in business spending on new plants and equipment.

The Trump administration is projecting that its economic policies will keep growth at rates of 3 percent or better in coming years.

Paul Ashworth, chief U.S. economist at Capital Economics, said the downward revision in inventory growth was a good sign for the future because it means businesses will have more room to build inventories in coming quarters, thus adding to GDP.

"The incoming monthly data suggest that second-quarter GDP growth will be much stronger," he said, predicting a rebound to growth of 3 percent to 3.5 percent in the current quarter.

The Trump administration is projecting that its economic policies will keep growth at rates of 3 percent or better in coming years. (AP)