Investors welcomed news that the US economy grew in the first quarter at an annual pace of only 1.8 percent, well below last month's estimate of 2.4 percent, because it may encourage the Fed to persist longer in its stimulus policy.
Gross domestic product (GDP) grew at an annual pace of just 1.8 percent in the first quarter, the Commerce Department reported Wednesday. That’s a big downward revision from the 2.4 percent estimate the government offered a month ago.
The downshift reflected new and smaller estimates of consumer spending, as well as a weakening of international trade and business investment.
The news isn’t a severe disappointment. Economists knew that, as the year began, consumers would be hit by changes such as the expiration of a temporary 2 percent reduction in worker payroll taxes. And during the second quarter, the US has continued to chart a path of economic growth, despite the onset of mandated federal spending cuts known as the “sequester.”