NEW YORK — The United States first quarter gross domestic product was revised up to 1.2 percent from 0.7 percent in the advance estimate, RBC Economics reported today.
Consumer spending growth remained modest but was revised up slightly to 0.6 percent from 0.3 percent previously, and an already-strong business investment gain was revised up to 11.4 percent, marking the strongest quarterly increase in five years.
Slower inventory investment was a slightly larger drag than previously reported.
“It is still the case that GDP growth moderated in the first quarter, but slightly less than previously reported and with the composition still arguing that the slowdown was more a result of quarterly volatility than a fundamental deterioration in the economic backdrop,” said Nathan Janzen, RBC senior economist.
“It remains the case that slower Q1 growth largely reflected a pullback in the volatile inventory component, which is now slightly larger than first reported, and a sharp slowing in consumer spending growth which is +0.6 percent now versus +0.3 percent in the advance estimate,” he added. “Both look unlikely to be repeated.
“On balance, data to-date remains consistent with our expectation that overall GDP growth bounced back to a solid 2.9 percent rate in Q2 and, combined with further tightening in labor markets, is consistent with our expectation that the Fed will hike the fed funds target range by another 25 basis points in June,” said Janzen.
SOURCE: RBC Economics press release