America’s economic growth slowed at the beginning of 2018 as household spending stalled in spite of recent tax cuts.
The US economy grew at a rate of 2.3% in the first quarter, according to the Commerce Department’s preliminary report on Friday. That’s slower than the 2.9% pace in the fourth quarter of 2017. Economists surveyed by FactSet had expected a 2% growth rate.The pace of growth is solid, though less than the 4% President Donald Trump had promised during his presidential campaign.
“The report was good but not great,” said Gus Faucher, chief economist at PNC.
Muted household spending was the catalyst for the drop-off.
Consumer spending, which accounts for more than two-thirds of the economy, eased to a 1.1% rate last quarter, its weakest in nearly five years.
Last quarter, spending grew at a robust 4% clip. Economists believe it jumped toward the end of last year in anticipation of tax cuts and as hurricane-damaged areas of the country spent more to replace cars and trucks.