- Nacho Doce/Reuters
The US economy grew faster than initially thought in the first quarter, according to the Commerce Department.
Gross domestic product, the value of everything produced in America, increased by 1.4%, a third estimate released Thursday showed. Consumer spending, the largest part of the economy, and exports were revised higher, though the broader picture of economic growth remained the same.
The US economy enters its ninth year of expansion in July.
GDP growth was forecast to be unrevised at 1.2%, according to Bloomberg. It was initially reported at 0.7%.
Some economists suspect that this still underestimates the pace of growth in the US, as the Commerce Department has done in every first quarter of this recovery. That’s because of residual seasonality, a quirk that distorts how temporary factors like the weather are accounted for.
Fed participants who decide on monetary policy said in minutes of their May meeting that they thought seasonality at least played a role. They raised interest rates in June, seeing the slowdown as transitory.
The third estimate of GDP “will not be the final word on the subject,” said Ian Shepherdson, the chief economist at Pantheon Macroeconomics, in a note on Thursday. “Indeed, there never will be a final word, because the numbers are revised indefinitely into the future. No wonder the Fed prefers to look at payroll growth as a better proxy for the state of the economy; you can never be sure that the GDP numbers are reliable, especially when looking at short periods.”
Revisions to this GDP print and every other one since the first quarter of 2014 will be published July 28.