WASHINGTON — The U.S. economic slowdown to start the year wasn’t quite as bad as first thought. The gross domestic product grew at a revised annual rate of 0.8 percent, slightly better than the preliminary figure of 0.5 percent. It’s still the weakest pace in a year.
It was the second consecutive lackluster quarter as the fourth quarter of last year grew at a paltry 1.4 percent.
Economists expect a turn around in the current quarter, however. Expectations are for growth of around 2 percent as employers are adding jobs at a solid pace. Businesses added 160,000 jobs in April, a solid gain but down from an average increase of 243,000 in the prior six months.
The unemployment rate remained at 5 percent, down by half from the 10 percent high hit in the fall of 2009 That should support increased consumer spending.
The economy does face headwinds though. Consumer spending grew at 1.9 percent in the first quarter, the weakest performance in a year. Much of that was reflected in auto sales.
Capital investment also plunged at an 8.9 percent rate in the first quarter, largely on weak spending on oil and gas exploration.
Investment in residential construction helped offset some of those losses. It grew at a sizzling 17.1 percent rate, the strongest advance in more than three years.
The current economic expansion will head into its seventh year next month, making it the fourth longest recovery since World War II. It has also been the slowest, averaging just 2.1 percent.
That growth prompted the Federal Reserve to surprise investors last week by indicating that Fed officials believed that a rate hike was likely in June if the economy keeps improving.
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