US first-quarter growth cut to 1.8pc
US economic growth was more tepid than previously estimated in the first quarter, held back by a moderate pace of consumer spending, weak business investment and declining exports.
Gross domestic product expanded at a 1.8pc annual rate, the Commerce Department said in its final estimate on Wednesday. Output was previously reported to have risen at a 2.4pc pace after a 0.4pc stall speed in the fourth quarter.
Economists polled by Reuters had expected first-quarter GDP growth would be left unrevised at 2.4pc. When measured from the income side, the economy grew at a 2.5pc rate, slower than the fourth-quarter's brisk 5.5pc pace.
Details of the report, which showed downward revisions to almost all growth categories, with the exception of home construction and government, could cast a shadow over the Federal Reserve's fairly upbeat assessment of the economy last week.
Though the data is fairly backward looking, it comes as financial market conditions are tightening after Fed Chairman Ben Bernanke said last week the U.S. central bank would likely begin to slow the pace of its bond-buying stimulus later this year and stop the program in 2014.
Economists fear that could undercut growth, which has recently shown signs of picking up.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased at a 2.6pc pace rather than 3.4pc. The revision largely reflected weak outlays on health care services.
Consumer spending grew at a 1.8pc rate in the fourth quarter of last year.
Exports, previously reported to have grown, actually contracted at a 1.1pc pace in the first quarter, cutting 0.15 percentage point from GDP growth. That likely reflects a slowdown in the global economy.
Business spending barely grew, with investment on nonresidential structures declining more sharply than previously reported. The drop in spending on nonresidential structures was the first in two years.
The pace of inventory accumulation was revised marginally down, adding more than half a percentage point to GDP growth. Excluding inventories, GDP grew at a 1.2pc rate, the slowest in two years.