First Quarter Slow Down For U.S. Economy – At 2.3 Percent

The Unites States Commerce Department announced on Friday that there has been a slowdown in the U.S. economy in the first quarter of 2018. The department said that compared to the rate for Gross Domestic Product (GDP) growth of 2.9-per cent that was achieved by the economy in the previous quarter, the first quarter of the current fiscal saw the rate slipping down to 2.3 per cent.

One of the major reasons for the slowdown of the rate of growth in eth first quarter, according to the announcement, was a fall in the personal consumption expenditure. There were other factors too that were identified in the report which included a slow down in the residential fixed investment by Americans and in the spending by the state and local governments, the department said in the report.

There was a growth rate of just 1.1 per cent in the personal consumption expenditures for the first quarter. This expenditure accounts for almost one third of the total economy and GDP. The rate in the previous quarter was 4 per cent.

This trend has raised eyebrows among many economists and policy makers because the U.S. Congress passed a tax cut proposal by U.S. President Donald Trump that effectively led to a total of about 1.5-trillion-U.S. dollar tax cut package, that package was passed at the end of last year and it was implemented starting the first quarter of 2018. This mean that people went home with a higher take home paycheck which was assumed to increase personal spending. But the does not seem to have happened as Americans were decidedly not ready to increase spending in that period.

There was a slight growth in the personal saving rate which was at 3.1 per cent in the first quarter against the same rate being at 2.6 per cent in the previous quarter, the Commerce department said. this was however not enough to offset the significantly large dip in personal expenditure.

On the other hand, there was drop in the nonresidential fixed investment which clocked at 6.1 per cent – down from the previous quarter’s rate of 6.8 per cent. This is a measure of how much the industry is spending on structures and equipment,

According to analysis, higher short-term interest rates and winter storms were the possible reasons for the somewhat flat rate of growth in residential investments in the first three months of the year.

It should be noted here that last month, the U.S. Federal Reserve had predicted a growth rate for the economy for 2018 to be around the 2.7 mark even through Trump has pledged to hasten the rate of economic growth in the country to over 3 per cent.

(Adapted from

Categories: Economy & Finance, Uncategorized

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