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U.S. growth hits 3-year low at 0.7% in Trump's 1st quarter

U.S. growth hits 3-year low at 0.7% in Trump's 1st quarter

Kristian Rouz - UK economic growth unexpectedly slowed in the first quarter, as higher post-Brexit vote inflation affected consumer spending, holding down the expansion in of the services sector.

The slow-down in real GDP in the first quarter reflected a decrease in personal consumption expenditures, private inventory investment and in state and local government spending.

Contrary to Trump's promises of ushering an era of 3% annual economic growth, the first quarter of his Presidency saw U.S. growth rate decline to the lowest in three years. While that contribution was rather paltry, it was significantly better than the 1.82 percentage point subtraction from net exports to the headline number in the fourth quarter.

"Most economists believe the track for the US economy for the intermediate future is going to be very familiar to what has been seen over the last number of years, and that's somewhere between one and probably 2.5 percent on an annual basis".

In a report, the Office for National Statistics (ONS) said gross domestic product expanded by a seasonally adjusted 0.3% in the three months ended March 31, below forecasts for growth of 0.4%. A rise in imports was offset by sturdy gains in exports, leaving a smaller trade deficit, which had a neutral impact on GDP growth. Nonresidential fixed investment increased 9.4 percent in the quarter, following a 0.9 percent increase in the fourth quarter of 2016, marking the fastest pace since 2013. Analysts surveyed by Reuters expected growth of 1.2 percent last quarter. "The marked dent in GDP stems from consumers tightening their belts in the face of rising living costs and businesses becoming more cautious over investments". Spending on durables and services took a hit in particular. That suggests the mostly weather-induced sharp slowdown in consumer spending is probably temporary.

Commerce Secretary Wilbur Ross, one of the administration's top economic policymakers, said that the weak first quarter performance showed the need for the new policies Trump is offering.

Trade War with Canada? Not So Fast
North American free-trade rules do not cover these ingredients, so US dairies sold those low-priced products to dairies in Canada. However, when Canada' s supply management was introduced in the late 1960's, it had 140,000 dairy farms.

U.S. Navy fires warning flare at Iran vessel in Persian Gulf
Of the incidents previous year , the worst involved Iranian forces capturing 10 United States sailors and holding them overnight. Since the nuclear deal with world powers, the hard-line Revolutionary Guard has stepped up its encounters with the Americans.

FCC chairman to propose reversing 'net neutrality' rules
Pai's FCC spiked the effort to go after AT&T , even before it began rolling out a plan to undo the net neutrality rules entirely. Like Pai, they argue that the stricter FCC oversight enabled by the Title II classification is unnecessary to enforce them.

Many economists are more skeptical. That would be an improvement from last year's 1.6 percent, the weakest showing in five years, but far below Trump's goal.

The bureau will release its second estimate for the first quarter of 2017 on May 27.

"There is enough reason to doubt the growth slowdown for the Fed to stay the course on tightening, especially with a bigger-than-expected pop in employment costs", said Chris Low, chief economist at FTN Financial in NY. Higher inflation, which saw the consumer price index averaging 2.5 percent in the first quarter, also hurt spending.

The annual rate was 2.1 percent, a figure some are reluctant to report.

Government spending on defense declined at a 4.0 percent pace, the biggest fall since the fourth quarter of 2014 and second quarterly drop.

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