First quarter GDP has been an anomaly in recent years, showing sharply lower figures than the rest of the year.
The U.S. economy slowed in the first quarter as consumer spending grew at its weakest pace in almost five years, but a surge in wages amid tightening labour market conditions and lower tax rates suggested the setback is likely temporary.
Over the past four quarters, GDP growth has averaged 2.9 percent, just below the 3 percent projection the Trump administration used in its budget for next year.
GDP, the value of all goods and services produced within the U.S., increased at an annualized rate of 2.3%, down from 2.9% in the fourth quarter.
For example, Greg Ip of The Wall Street Journal said in a series of tweets Friday morning that the data from the fourth quarter was likely distorted by post-hurricane vehicle purchases and home fix; excluding auto sales and residential investment results in stronger growth numbers for the first quarter. The data comes after the fourth quarter a year ago grew 2.9%.
An increase in business spending, however, helped offset consumer lulls.
In the appendix of the CBO report, it shows that, before accounting for economic growth, the tax cuts Trump signed into law late previous year would cut federal revenues by $1.69 trillion from 2018-2027. According to the Commerce Department's surveys, tax cuts were not reflected on many workers pay until late in the first quarter.More news: Royal wedding: Prince Harry names Duke of Cambridge as best man
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The annual Economic Report of the President, released last month, forecast 3.1 percent growth this year, increasing to 3.2 percent the following year. The U.S. economy grew at a steady 2 percent rate over the past decade.
Federal Reserve officials are likely to shrug off the first-quarter performance. Households also boosted savings, which bodes well for a pickup in spending.
USA economic growth cooled last quarter as consumers pulled back following outsize spending in the prior period, though solid business investment cushioned some of the weakness. The winter months have been the weakest quarter of the year for several years. The Congressional Budget Office recently estimated 3.3 percent growth this year, dropping to 2.4 percent in 2019 and 1.8 percent the following year. A measure of inflation, tied to consumer spending and excluding volatile food and energy costs, advanced at a 2.5% annualized pace, the fastest since 2011, adding to signs that price gains are picking up. The cooling in equipment investment comes as the stimulus from a recovery in commodity prices is fading.
Government spending grew at a 1.2 percent rate, slowing from the fourth quarter's 3.0 percent pace.
Investment in homebuilding was unchanged in the first three months of the year as sluggish home sales caused by a dearth of houses on the market weighed on brokers' commissions. Residential construction increased at a 12.8 percent rate in the October-December period.
At the same time, Boeing said it's seeing solid global demand, while United Parcel Service said the US economy is showing "healthy fundamentals".
GDP in the United Kingdom grew by just 0.1% for the first quarter as uncertainty over the UK's exit from the European Union next year crimped business investment and weighed on construction.