The U.S. economy grew at its weakest pace in three years in the first quarter as consumer spending barely increased and businesses invested less on inventories, in a potential setback to President Donald Trump’s promise to boost growth.
Gross domestic product increased at a 0.7 percent annual rate also, as the government further cut defense spending, the Commerce Department said on Friday in its advance estimate. That was the weakest performance since the first quarter of 2014.
The economy grew at a 2.1 percent pace in the fourth quarter. The pedestrian first-quarter growth pace is, however, not a true picture of the economy’s health.
The labor market is near full employment, generating stronger wage growth, and consumer confidence is near multi-year highs. That suggests the mostly weather-induced sharp slowdown in consumer spending is probably temporary.
First-quarter GDP also tends to underperform because of difficulties with the calculation of data that the government has acknowledged and is working to rectify.
“Weak, but GDP growth has tended to be below…