Apr 28, 2017
2017 Q1: Economy Grew At A 0.7 Percent Rate, Weakest Growth In Three Years
Post by Freedom Partners
Today, the U.S. Department of Commerce released its first estimate of gross domestic product (GDP) for the first quarter 2017, announcing that the U.S. economy expanded at an annualized rate of 0.7 percent, down from 2.1 percent during the fourth quarter of 2016, and down from 3.5 percent in the third quarter.
This marks the first glance at economic growth during the Trump administration showing that much work still needs to be done to get the economy moving again amidst the worst economic expansion since 1949.
Driven by slower consumer spending, this marks the second consecutive quarter GDP growth has declined indicating that most families aren’t feeling any meaningful improvements. However, faster business activity driven by more investment in structures and equipment provides a bright spot in an otherwise weak report.
Below is a deeper look at the numbers from today’s report and what they say about the state of the U.S. economy and labor market.
Here are the facts:
2017 Quarterly Growth: The economy grew at an average quarterly rate of 0.7 percent during the first quarter of 2017, the weakest rate observed in three years. In addition, today’s reading is 0.1 percentage points slower than growth observed during the first quarter of 2016, and is 1.3 percentage points slower than the first quarter growth observed during 2015.
Post-Recession Growth Rate: From 2010 to 2016, the economy averaged a mere 2.1 percent quarterly growth rate. This is significantly lower than the 3.5 percent average rate of growth in the same timespan after the last three recessions and the weakest expansion since 1949.
Pre-Recession Growth Rate: From 1946 to 2007, the U.S. economy expanded at an average quarterly rate of 3.5 percent, significantly higher than the growth rate observed during the current post-recession expansion and 2.8 percentage points higher than the growth rate observed during the fourth quarter of 2016.
Higher Business And Residential Investment: Business investment grew by 9.4 percent during the first quarter of 2017, marking the best reading since the third quarter of 2014 when business investment increased by 8.3 percent. This was driven largely by an increase in spending on equipment and structures, growing at 9.1 percent and 22.1 percent respectively. Spending on residential properties grew at rate of 13.7 percent during the first quarter, the fastest growth since the 2015.
Consumer Spending Growth: Consumer spending, which accounts for roughly 70 percent of U.S. economic activity, grew at an annual rate of 0.3 percent during the during the first quarter of 2017, the slowest reading since 2009. Overall, consumer spending increased 3.2 percentage points slower than the fourth quarter of 2016, and is 2.7 percentage points slower than the rate seen over the third quarter.