"We saw some good resilience from the consumer, particularly given all the headwinds"
- Michael Feroli, chief U.S. economist at JPMorgan Chase & Co.
The U.S. economic growth regained speed in the first quarter, however, the pace of growth is slower that was estimated, as a drop in defence outlays undercut the biggest increase in consumer spending in two years. The Commerce Department said Friday that the nation's gross domestic product rose at a 2.5% annual rate in the first quarter of this year, below 3% estimated by analysts. Partially, the acceleration in activity was boosted by farmers' activity; however, removing inventories, the growth rate stood at a tepid 1.5%. Recent data signal that even despite the acceleration, recent employment and retail sales data suggests spending is slowing. Moreover, recent budget cuts and fall in government spending weighed on the growth rate.
"We saw some good resilience from the consumer, particularly given all the headwinds," said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York. "The weakness in government spending is an issue. It's going to be tough to repeat the first-quarter performance this quarter."
"It wasn't the bang-up start to the year we had hoped for, and the signals from March suggested that we will only decelerate from here," said Avery Shenfeld, chief economist at CIBC World Markets Economics in Toronto.
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