GDP Growth Slows Markedly — And Possibly Temporarily — In 1Q

Slow going, at least for now.

The U.S. economy showed growth, albeit muted, in the first quarter of 2017. And in fact, the latest numbers out from the government show that growth has lagged to its slowest pace in three years.

Gross domestic product grew by a 0.7 percent annual rate in the quarter, which reflects a marked slowdown from the 2.1 percent and 3.5 percent shown in the last two quarterly reports, representing the final two periods of 2016. The latest showing was below economists’ estimates for a 90 basis point gain.

The significant decrease in growth came as consumer spending showed scaled-back growth. Consumer spending was up 30 basis points, compared to the 3.5 percent gain at the end of last year.

MarketWatch noted that the drop-off may a temporary one, as within the U.S., consumers throttled spending in the wake of unseasonably warm weather. Against that backdrop, they spent less on weather-related items, such as home heating, gasoline and clothing. The larger picture is robust for household finances, which indicates there may be a pickup in spending.

Consider, as MarketWatch posited, that the labor market remains resilient: unemployment remains low, wages are still on the upswing.

Other data show that there is confidence in putting money to work, especially in larger ticker spending. Investment in home building was up 13.7 percent in the quarter. Business spending, on infrastructure (aka fixed items) was up 10.4 percent. The value of new inventories came in to a tally of $10.3 billion in the first quarter, down from $50 billion at year’s end. And core inflation, adjusted for items such as food and energy, came in at 2 percent.