-Janet Yellen, Fed Chair
The US economy contracted in the first quarter less than previously estimated as it struggled with bad weather, a strong US Dollar, spending cuts in the energy sector and disruptions at West Coast ports. The American gross domestic product declined at a 0.2% annualized rate, compared with the 0.7% drop reported previously, according to revised data from the Commerce Department. The data bolstered Fed's projections that the setback was temporary. The US growth was supported by robust consumer spending, which accounts for more than two thirds of US economic output. Consumer spending increased 2.1% in the reported period, up from 1.8% estimated earlier. Thanks to this upward revision, the GDP growth rate received a boost of 20 basis points. Yet, household consumption decelerated sharply after soaring 4.4% in the final quarter of last year. In addition to consumer spending, gains in inventories and home building, and a smaller decline in non-residential structures also helped boost GDP in the first quarter. While export growth was revised higher, that was offset by an upward revision to imports, leaving a still-large deficit that deducted almost 2 percentage points from GDP.
The first estimate of second-quarter GDP is scheduled for July 30. The economy is likely to expand at a 2.5% rate from April through June and average 3% growth in the last half of the year, according to the median projection of economists.
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