The US economy grew at a 2.7 per cent annual rate in the first quarter, less than previously calculated, reflecting a smaller gain in consumer spending and a bigger trade gap.
The revised increase in gross domestic product was smaller than the median forecast of economists surveyed by Bloomberg News and compares with a 3 per cent estimate issued last month, figures from the Commerce Department showed today in Washington. Corporate profits climbed more than previously projected.
The revised figures showed an economy that was more dependent on inventory re-stocking and less driven by demand from consumers and businesses before the European debt crisis intensified. Unemployment, combined with the turmoil in financial markets and a lack of inflation, are among reasons Federal Reserve policy makers this week reiterated a pledge to keep interest rates low.
“It’s a moderate kind of recovery,” said Jay Feldman, an economist at Credit Suisse in New York, who projected growth would be revised down. Consumer spending “is not growing as fast as in prior recoveries.”
Stock-index futures dropped immediately after the report, trimming earlier gains. The contract on the Standard & Poor’s 500 Index rose 0.1 per cent to 1,071.8 at 8:48 am in New York. Treasury securities were little changed.
GDP was forecast to grow at a 3 per cent annual pace, according to the median estimate of 79 economists surveyed. Projections ranged from gains of 2.4 per cent to 3.6 per cent. The world’s largest economy expanded at a 5.6 per cent pace in the last three months of 2009.