May 26, 2017
Economy Grew at a 1.2 Percent Rate, Weakest Since the First Quarter of 2016
Post by Freedom Partners
Today, the U.S. Department of Commerce released its second estimate of gross domestic product (GDP) for the first quarter of 2017, announcing that the U.S. economy expanded at an annualized rate of 1.2 percent, down from 2.1 percent during the fourth quarter of 2016, and down from 3.5 percent in the third quarter. The 1.2 percent rate represents a 0.5 percentage point upward revision over the preliminary estimate of 0.7 percent.
This is an early look at economic growth during the Trump administration, showing that much work still needs to be done to get the economy moving again amidst the slowest economic expansion since 1949.
Driven by slow consumer spending, this marks the second consecutive quarter GDP growth has cooled, indicating that many Americans aren’t feeling any meaningful improvements. Economists, however, expect growth to accelerate in the second quarter of 2017.
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 a 1.2 percent rate during the first quarter of 2017, the weakest rate in a year but up from the anemic 0.8 percent growth observed in the first quarter of 2016.
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 2.3 percentage points higher than the growth rate observed during the first quarter of 2017.
Higher Business And Residential Investment: Business investment grew by 11.4 percent during the first quarter of 2017, marking the best reading since the first quarter of 2012 when business investment increased by 12.2 percent. This was driven largely by an increase in spending on equipment and structures, growing at 7.2 percent and 28.4 percent respectively. Spending on residential properties grew at rate of 13.8 percent during the first quarter, the fastest growth since the second quarter of 2015.
Consumer Spending Growth: Consumer spending, which accounts for roughly 70 percent of U.S. economic activity, grew at an annual rate of 0.6 percent during the during the first quarter of 2017, revised up from 0.3 percent growth but still the slowest reading since the fourth quarter of 2009. Consumer spending grew by a relatively robust 3.5 percent in the fourth quarter of 2016.