"Economists, however, caution that the administration’s “America First” policies, which have heightened fears of trade wars, are casting a pall over the economy’s prospects."
U.S. first-quarter GDP growth lowered; weekly jobless claims rise
WASHINGTON (Reuters) - The U.S. economy slowed more than previously estimated in the first quarter amid the weakest consumer spending in nearly five years.
The economy grew at a 2.9 percent rate in the fourth quarter. The downgrade to first-quarter growth reflected weaker consumer spending and a smaller inventory build than the government had estimated last month.
Economists, however, caution that the administration’s “America First” policies, which have heightened fears of trade wars, are casting a pall over the economy’s prospects.
The United States is engaged in tit-for-tat trade tariffs with its major trade partners, including China, Canada, Mexico and the European Union. Analysts fear the tariffs could disrupt supply chains, undercut business investment and potentially wipe out the fiscal stimulus.
“Trade is a significant downside risk,” said Gus Faucher, chief economist at PNC Financial Services in Pittsburgh. “The potential of a trade war that threatens the global economic expansion could lead to weaker U.S. economic growth.”
The dollar fell against a basket of currencies while prices of U.S. Treasuries dipped.
CONSUMER SPENDING SLOWDOWN
Growth in consumer spending, which accounts for more than two-thirds of U.S. economic activity, braked to a 0.9 percent rate in the first quarter instead of the previously reported 1.0 percent pace. It was the slowest pace since the second quarter of 2013 and reflected downward revisions to healthcare spending by nonprofits and outlays on finance and insurance services.