American first-quarter GDP surge speeds down

American first-quarter GDP surge speeds down

In the first quarter, the economy of the United States speeded down more than previously predicted in the face of the poorest consumer spending for the last five years, although surge has regained momentum due to a firm labor market as well as tax cuts.

As a matter of fact, gross domestic product managed to ascend at a 2% annual rate from January to March. That’s what the Commerce Department informed on Thursday in its third prediction of first-quarter gross domestic product, versus the 2.2% tempo posted in May.

In the fourth quarter the American economy rallied at a 2.9% rate. Apparently, the downgrade to first-quarter surge pointed to weaker consumer spending as well as a smaller inventory build than the authorities had evaluated in May.

A $1.5 trillion income tax cut package that came into effect in January, is supposed to ensure faster economic surge in the second quarter, thus putting annual GDP surge on track to reach the Trump administration's 3% objective.

However, market experts point out that the administration's stance "America First" that has heightened worries of trade clashes, are threatening the economy's prospects.

America is involved in tit-for-tat trade duties with its key trade partners, such as Canada, Mexico, China and the EU. Market experts are afraid that the duties are capable of disrupting supply chains, undercutting business investment and even wiping out the fiscal stimulus.

Estimates of second-quarter surge point to a rate of 5.3%. Market experts had hoped first-quarter GDP surge wouldn’t be revised, keeping to a 2.2% tempo.

However, the moderate first-quarter surge can hardly be a true indicator of the US economy's health due to the fact GDP is prone to weakening at the start of the year due to a seasonal quirk.

Meanwhile, US equities were mostly intact.

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