-RBC Capital Markets LLC
The US economy expanded in the first quarter at the slowest pace in two years due to a sharp pullback in business investment and sluggish global demand. Gross domestic product rose at a 0.5% seasonally adjusted annual rate in the first quarter, according to the Commerce Department. This is the government's first of three estimates for the quarter before annual revisions in July. Consumers and the housing market kept the US economy from sliding backward, albeit only barely. Among the forces working against the US growth in recent months was a lacklustre demand from overseas and a strong Dollar that have led to a decline in exports, subtracting from growth.
After its meeting earlier in the week, the Fed provided a mixed review of the economy, saying in its statement that economic activity had slowed despite labour market improvement. Though the US central bank had entered the year with the plan to hike interest rates several times, it has so far refrained from any moves, a response to overseas volatility, particularly in China, and to the contradicting signals about US economic health. Analysts say the Fed could still decide to raise interest rates at its next meeting in June. The International Monetary Fund, in mid-April, estimated that the US economy would grow by 2.4% this year, slightly better than the pace of other developed economies.
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