If only this news on the US economy had come out before Brexit, then the Federal Reserve Bank could finally raise rates. But as we all know, Brexit has thrown all that out the window.
Still, the US Commerce Department reported on Tuesday that US economic growth was actually higher than first reported. First-quarter gross domestic product grew at a 1.1% annual rate, better than the 0.8% pace reported last month on gains in exports and software investment. The first-quarter revision was in line with economists’ expectations
However, it was still a decline from the 1.4% growth rates in the fourth quarter. The decline was blamed on weak consumer spending, a strong dollar and sluggish global demand.
Growth looks to continue in the second quarter with both retail sales and home sales rising in both April and May, even though business spending continues to struggle and job growth has slowed.
However, the repercussions of Britain’s vote to leave the European Union throws forecasts for the rest of the year into doubt.
The Atlanta Federal Reserve is currently estimating second-quarter GDP rising at a 2.6% rate.
When measured from the income side, the economy grew at a 2.9% rate in first quarter and not the previously reported 2.2% pace, reflecting upward revisions to corporate profits. That was the quickest pace since the third quarter of 2014.
First-quarter business spending on software, research and development was revised to a 4.4% growth rate, instead of falling at a 0.1% rate. Business spending on equipment fell at a rate of 8.7%, instead of the 9.0% rate reported last month.