US economy grows at its slowest pace in 3 years

The US economy grew by 0.7%in the first quarter, weaker than expected, according to an advance estimate from theDepartment of Commerce released on Friday. It was the slowest pace in three years.Economists had forecast that gross domestic product rose at an annualized rate of 1%, according to Bloomberg.The slowdown from the fourth quarter, when the economy grew 2.1%, is roughly in line with the sluggishness seen every first quarter in this recovery partly due to seasonal adjustment issues that have not yet been resolved.The lull can be attributed to weaker consumer spendingin the first three months of the year. Personal consumption grew by 0.3%, the weakest pace since 2009, slowingfrom a 3.5% growth pace in the fourth quarter.Data on retail sales and personal outlays previewedthis drop in spending. Auto sales fell every month from January through March. Economists also pointed to delayed tax returns as one reason why spending dropped.Private, fixed nonresidential investment 'or business investment' was a major contributor to growth, as mining exploration rebounded. Homebuilding also boosted the economy in the first quarter."This lull in growth should be short livedas real GDP growth is expected to rebound to 2.5% this quarter and then rise to 3.5% in Q3 and 4.0% in Q4," said Joseph LaVorgna, Deutsche Bank's chief US economist, in a preview.These forecasts, he added, assume that the economy will get some fiscal stimulus in the coming months. But as the healthcare bill showed, the timing of policy reform is uncertain. President Donald Trump has promised to return the economy to 3% growth, although the low rate of worker productivity has many economists doubtful that this is possible right now.This GDP report is the first major scorecard of the economysince Trump took office 99 days ago."Wait till you see the growth," Trump said on Thursday. "The growth is going to pay for" the tax cuts unveiled on Wednesday, he added.More to come ...SEE ALSO:A key part of Trump's tax plan is unlikely to benefit most AmericansDON'T MISS:A fund manager with $13.6 billion in assets shares his simple strategy for picking stocksJoin the conversation about this storyNOW WATCH: The world's rarest and most ancient dog has just been rediscovered in the wild
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