WASHINGTON: The U.S. economy in the first quarter expanded faster than previously estimated, while future uncertainties, like Brexit, will keep the the country’s growth at a subdued rate for the whole year.
Gross domestic product increased at an annual rate of 1.1 percent during the period January to March, higher than the previous estimate of 0.8 percent, said the Commerce Department on Tuesday.
The upward revision primarily reflected strong growth in residential investment and exports, which increased 15.6 percent and 0.3 percent respectively.
“Strong growth in residential investment boosted real GDP growth, but weakness in business investment, exacerbated by weak foreign demand and low oil prices, weigh on growth,” said Jason Furman, chairman of the Council of Economic Advisers under the White House.
Nonresidential fixed investment, reflecting business spending on equipment, buildings and software contracted by 4.5 percent, a second straight falling.
Private consumption, a major economic engine, increased 1.5 percent, lower than the previous estimate of 1.9 percent and 2.4 percent in the fourth quarter of 2015.
“Going forward, increased uncertainty, including uncertainty regarding the consequences of British voters’ decision last week to leave the European Union, underscores the importance of proactive policy steps to strengthen the U.S. economy,” said Furman.
Recent economic data for the second quarter indicated economic growth in the second quarter would accelerate from the first quarter.
However, analysts said growth for the year may be kept at about the 2 percent level, lower than the 2.4 percent of both 2014 and 2015.
Last week, the International Monetary Fund (IMF) tuned down its predication for U.S. growth in 2016 to 2.2 percent.
The IMF said the U.S. economy will be affected by slow business investment and global growth risks as well as some structural problems within the economy, including labor force participation, weak productivity growth and rising poverty.
