US economic growth at the start of 2019 was slightly slower than originally reported but remained robust despite President Donald Trump’s extended government shutdown, according to new data released Thursday.
GDP growth in the January-March quarter was revised to 3.1 percent,
compared to the 3.2 percent growth reported last month, as American companies spent less on equipment and software but exports rose and consumers bought more cars than previously thought, according to the Commerce Department, reports BSS.
But the data showed a sharp drop in corporate profits, which took their biggest quarterly tumble in more than three years.
Even with the downward revision to growth — which matched economists’ expectations — it was still the hottest first quarter since 2015, due to rosier new estimates for factory building and manufacturing activity helped by a drop in oil imports.
The new estimate defies the usual behavior at the start of a year when growth is expected to slacken, and could give Trump a boost heading into the presidential elections of 2020.
But economists expect the second quarter of the year will be substantially slower. And amid the escalating trade war with China, signs of weakness persisted.
While exports were broadly higher, imports fell to their lowest in more than six years a sign the economy could be running out of steam.
Meanwhile, though consumer spending and business investment were revised upward, both were sharply slower than in the final months of 2018.
Officials say the extended five-week government shutdown early in the year — when Trump unsuccessfully demanded that Congress fund construction of a wall along the southern US border — likely shaved about 0.3 percentage points from growth in the first quarter.
The shutdown immobilized major federal services on which much of the economy depends, such as oil drilling permits, food inspection and ice- breaking at commercial ports.
Corporate profits fell $65.4 billion compared to the final quarter of 2018, the weakest showing since the end of 2015.
The Commerce Department will have another chance to revise the first quarter result next month as more data become available.