WASHINGTON (6/27/13)--The U.S. economy grew less than previously estimated in the first quarter, with gross domestic product increasing at a 1.8% annualized rate--down from a prior estimate of 2.4%, the Commerce Department said Wednesday.
The downward adjustment is attributed to fewer purchases on services such as healthcare, take-out food and travel by consumers adjusting their budgets after taxes increased. Other factors are a weaker business investment by firms and declining national exports (MarketWatch, Bloomberg.com, The New York Times and The Wall Street Journal June 26).
Slower spending on consumer services--which increased 1.7% instead of the previously reported 3.1%--are mostly responsible for the GDP revision, MarketWatch said.
Also, investments in business structures such as plants and office buildings fell 8.3% rather than the previously estimated 3.5%, MarketWatch said.
This year saw the economy start slower than anticipated, but because financial institutions are making it easier to borrow, the second half of 2013 should be better, Maury Harris, New York-based chief economist for UBS Securities LLC, told Bloomberg.
Although the U.S. economy has expanded for 15 consecutive quarters, the roughly 2% pace of those gains is part of one of the slowest economic recoveries since World War II in the 1940s, said the Journal. Economic output grew a scant 0.4% in fourth quarter 2012, the Journal added.