While the U.S. economy saw continued growth in the first quarter of 2012, the Commerce Department released a report on Thursday showing that the pace of growth was slower than previously estimated.
The report showed that GDP increased at an annual rate of 1.9 percent in the first quarter compared to the initial estimate of 2.2 percent growth. The downward revision to the pace of growth came in line with expectations.
The Commerce Department said the revision to the pace of growth reflected downward revisions to private inventory investment, state and local government spending and consumer spending as well as an upward revision to imports, which are a subtraction in the calculation of GDP.
Although the report showed slower than previously estimated first quarter growth, Paul Ashworth, Chief U.S. Economist at Capital Economics, said, "The composition of that growth now looks a lot more promising."
"In particular, the contribution from inventories was revised down from +0.6% to +0.2%, while at the same time the contribution from business investment was revised from -0.2% to +0.2%," Ashworth said.
Nonetheless, the downwardly revised pace of GDP growth in the first quarter reflects a somewhat more substantial slowdown compared to the 3.0 percent growth seen in the fourth quarter.
The deceleration compared to the previous quarter reflected decelerations in private inventory investment and non-residential fixed investment and an acceleration in imports.
The report showed that consumer spending increased by 2.7 percent in the first quarter, a downward revision from the 2.9 percent growth previously estimated but still faster than the 2.1 percent growth seen in the fourth quarter.
Exports of goods and services surged up by 7.2 percent compared to the previously estimated 5.4 percent growth, while imports jumped 6.1 percent versus the previously estimated 4.3 percent increase.
The Commerce Department also said its reading on consumer prices showed a 2.4 percent increase in the first quarter, unchanged from the initial estimate and notably faster than the 1.2 percent increase seen in the fourth quarter.
Excluding food and energy prices, consumer prices increased by an unrevised 2.1 percent in the first quarter, reflecting a notable acceleration from the 1.3 percent growth in the fourth quarter.
by RTT Staff Writer
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