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US economic growth slowed in the first three months of this year to the lowest rate since 2014, sharpening the challenge for the Trump administration to meet its promise to stoke a far higher level of expansion for the world’s biggest developed economy.
The economy expanded at an annualised rate of 0.7 per cent, from 2.1 per cent in the previous quarter, according to figures released on Friday by the commerce department. Wall Street economists had forecast a pace of 1 per cent.
Expectations for first quarter growth have dimmed substantially since the end of January as hard data have struggled to keep pace with the surge in many surveys, from consumer sentiment, to small business confidence, that came after the election of Donald Trump.
Growth in consumption, which accounts for about 70 per of GDP, tumbled to a 0.3 per cent rate, from 3.5 per cent in the fourth quarter of 2016. It was the weakest reading since 2009.
Many Wall Street economists have shrugged off the data, even ahead of Friday’s report. They noted that the data were likely afflicted by seasonal factors.
“We attribute much of the weakness in [the first quarter] to two transitory factors,” said Citigroup’s Andrew Hollenhorst. He pointed to warm weather cutting utilities usage, as well as delayed tax refunds. Weakness in auto sales, something he sees as an “idiosyncratic story” he said ahead of the report.
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