Economy in U.S. Grew Less Than Projected in First Quarter
By Shobhana Chandra - Jun 26, 2013 8:30 AM ET
The economy in the U.S. grew less than previously calculated in the first quarter, reflecting less spending on services by consumers who were trying to make ends meet after taxes rose.
Gross domestic product expanded at a revised 1.8 percent annualized rate from January through March, down from a prior estimate of 2.4 percent, figures from the Commerce Department showed today in Washington. Household purchases, which account for about 70 percent of the economy, were revised to a 2.6 percent advance compared with the 3.4 percent gain estimated last month.
Households cut back on travel, legal services and personal care expenditures and also curbed spending on health care as the two percentage-point increase in the payroll tax caused incomes to drop by the most in more than four years. A housing rebound and improving job market will probably help revive purchases in the second half of the year, one reason economists project the economy can withstand the automatic government budget cuts.
“We expect an improving economy and improving labor market through the rest of the year,” Kevin Cummins, an economist at UBS Securities LLC in Stamford, Connecticut, said before the report. “Recent consumer data have held up better than expected. Gains in net wealth are lending an important support to consumer spending.”
The median forecast of 82 economists surveyed by Bloomberg called for a 2.4 percent rise in GDP, the value of all goods and services produced, the same as the Commerce Department previously estimated.
more:
http://www.bloomberg.com/news/2013-06-26/economy-in-u-s-expanded-less-than-projected-in-first-quarter.html
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