Economy’s winter chill wasn’t <i>that</i> bad, but growth still is anemic, at 1.1%
The winter wasn’t as rough for the U.S. economy as earlier thought, with growth revised upward Tuesday to a 1.1% annual rate — more than double the initial estimate but still an anemic pace.
The new figures from the Commerce Department mean growth from January through March was off only slightly from the 1.4% annual pace in the fourth quarter of 2015.
Growth is expected to have rebounded in the April-through-June period to about a 2.6% annual rate.
Still, the slow start to the year and continued sluggish pace of growth doesn’t give the U.S. economy much of a cushion to absorb potential shocks, such as the expected drag from the British vote to leave the European Union.
Economists were alarmed when government statisticians initially estimated that the economy expanded at just a 0.5% annual rate in the first quarter amid a stock market plunge to start the year.
That level of growth in total economic output — also known as gross domestic product — would have been the worst performance in two years, and it triggered fears of another recession.
The Commerce Department revises quarterly growth figures twice as it compiles more complete data. The revisions this time showed that businesses didn’t cut their investments as deeply as earlier thought in the first quarter. Still, investment fell 4.5%, more than double the 2.1% decline in the fourth quarter and the biggest drop since 2009.
In addition, exports increased 0.3% in the first quarter instead of declining by 2.6% as was initially estimated. The increase was a rebound from a 2% fourth-quarter decline.
However, the revisions didn’t improve the poor consumer spending at the start of the year as Americans saw their 401(k) balances take a hit by falling stock prices.
Personal consumption expenditures increased 1.9% in the first quarter, the slowest pace in two years. Consumer spending increased 2.4% in the fourth quarter.
Follow @JimPuzzanghera on Twitter
