Washington, DC, June, 25--The U.S. economy was surprisingly weaker during the first quarter than previously thought, the government said in a report showing slightly lower consumer spending and a sharper taste for imports.
Gross domestic product increased during January through March at a 3.9% annual rate, revised down from an earlier estimated 4.4%, the Commerce Department said Friday.
There were upward revisions to inflation gauges in the report.
And in a revised estimate of after-tax profits of U.S. businesses, Commerce said corporate earnings increased 2.1% from the previous three months; it originally forecast a 1.4% advance. The first-quarter increase was lower than fourth-quarter profit growth of 5.7%. Year over year, first-quarter profits were up 37.7% from the same period a year earlier.
The new GDP projection was quite a bit weaker than expectations on Wall Street. A Dow Jones-CNBC survey of 17 economists had forecast an unrevised growth figure of 4.4%.
"The revision reflected an upward revision to imports and a downward revision to consumer spending that were partly offset by an upward revision to exports," Commerce said.
Imports are subtracted in the calculation of GDP, which is a measure of all the goods and services produced in the U.S.
A key component of GDP is consumer spending, which accounts for about two-thirds of economic activity.
Spending by consumers rose at a 3.8% annual rate in the first quarter. The government earlier reported first-quarter outlays increased 3.9%. Fourth-quarter spending rose 3.2%.
Consumers' spending on durable goods, meant to last at least three years such as cars, fell 3.7%, revised up from a previously reported 4.2% decline. Fourth-quarter durable goods spending rose 0.7%. First-quarter spending on non-durables increased by 6.9%, revised up from a previously estimated 6.6% increase.
Business spending advanced by 5.3%, revised down from a previously estimated 5.8% increase. Equipment and software spending climbed 9.2%. Non-residential structures went down 7.4%. Overall business spending rose 10.9% in the fourth quarter.
Businesses increased inventories by $25.5 billion, revised down from an earlier estimated $28.2 billion boost. The change in inventories added 0.65 of a percentage point to GDP growth.
Companies elevated inventories $9.0 billion in the fourth quarter.
Real final sales of domestic product -- that is, GDP less the change in private inventories -- rose at a 3.2% annual rate. That figure was revised down from a prior reported 3.7% advance. Fourth-quarter real final sales climbed at a 3.4% annual rate.
