The Bureau of Economic Analysis reported that the U.S. economy grew 0.7 percent at the annual rate in the first quarter, starting 2017 off on a soft start as expected. This follows real GDP growth of 2.1 percent in the fourth quarter. Weaker consumer and inventory spending in the first quarter could explain the lower figures, with government spending also serving as a drag on the headline number.
To be fair, this is just the first estimate, so there is a chance that future revisions might show better growth, particularly if incoming data for March are better than expected. In addition, we traditionally have a sluggish first quarter followed by a strong rebound in the second quarter. My current forecast is for 2.8 percent growth in real GDP in the second quarter, with the economy expanding 2.1 percent for 2017 as a whole. Of course, these estimates might drift higher with passage of more pro-growth policies, especially in terms of the outlook later this year and into 2018.