Gross domestic product rose at a 0.8% annualized rate in the three months ended in March, the smallest gain in a year, Commerce Department figures showed May 27. That compares with the 0.5% advance the government reported last month.
The figures do little to alter views of the third consecutive sluggish start to the year, and could portend a tougher slog in the second quarter as businesses work to continue to pare stockpiles. At the same time, household income gains were stronger than previously reported as the labor market strengthened, which will help support consumer spending.
“It’s still a very poor start to the year,” Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, said before the report. “From past experience we get most of that back in the second quarter.”
The median forecast in a Bloomberg survey called for a 0.9% gain in GDP, the value of all goods and services produced. Projections ranged from 0.5% to 1.4%. This is the second of three estimates for the quarter before annual revisions in July.
The report included revisions to fourth-quarter personal income that showed pay accelerated even more than previously estimated. Wages and salaries grew by $125.5 billion, the biggest quarterly gain in almost two years and up from the $81.7 billion gain previously reported.
After-tax personal income adjusted for inflation climbed at a 4% annualized rate in the first quarter, revised up from a prior estimate of 2.9%. The saving rate was also pushed up to 5.7%, the highest since the fourth quarter of 2012, from 5.2%.
The figures also offered a first look at corporate profits. Before-tax earnings rose 0.3% from the prior quarter, but were down 5.8% from the same time last year.
Total income in the economy, which combines all forms of earnings, increased at a 2.2% annualized rate, the most since the fourth quarter of 2014.
Household purchases, which account for almost 70 % of the economy, grew at a 1.9% annualized rate, the same as initially estimated.