The U.S. economic growth in the first quarter slowed, though not as sharply as expected, amid a rally in home building expenses and a stable rise in businesses’ inventory investment.

According to the Commerce Department in its second gross domestic product estimate, GDP pushed up at a 0.8% annual rate, in contrast to the 0.5% pace released in the previous month. It was reported to be the weakest growth since the first quarter of 2015.


The ascending revision to first-quarter GDP growth reflected a smaller drag from trade than earlier announced as well. The government also stated a recovery in after-tax corporate profits, which grew at a 0.6% rate in the first quarter after tumbling at an 8.4% pace in the fourth quarter. Gauging from the income side, the economy rose at a 2.2% rate after expanding at a 1.9% pace in the fourth quarter.

A strong dollar and slow global demand hurt the economy though, eroding export growth. The economy has also been dragged by lower oil prices, which have weakened profits of oilfield firms such as Schlumberger and Halliburton, pressuring them to cut equipment spending.

Economists also claim that the model used by the government to remove seasonal patterns from data is not completely accomplishing its purpose despite steps in the previous year for a resolution to this problem. First-quarter GDP data has been plagued by residual seasonality, with GDP rate floundering in five of the last six years since the economic rebound began in mid-2009.


Hints of the economy regaining momentum early in the second-quarter are seen: increases in retail sales, goods exports, industrial production, housing starts and home sales in the previous month.

The Atlanta Federal Reserve, at present, is estimating second-quarter GDP growth gaining at a 2.9% rate. But the continuing high level of inventories poses a downside threat to this prediction.

In a Reuters’ poll, economists had anticipated first-quarter GDP growth be revised up to a 0.9% rate. The economy grew at 1.4% in the fourth quarter.

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