G.D.P. Report Shows U.S. Economy Off to Slow Start in 2017

The softness last quarter also provides crucial ammunition for the Trump administration’s arguments that big tax cuts and regulatory rollbacks are necessary for the economy to grow the way it did in the 1980s and 1990s.

Tax cuts, regulatory relief, trade renegotiations and an unfettered energy sector are needed “to overcome the dismal economy inherited by the Trump administration,” said Commerce Secretary Wilbur Ross. “Business and consumer sentiment is strong, but both must be released from the regulatory and tax shackles constraining economic growth.”

The first-quarter fade is also sure to be noticed by the Federal Reserve as it contemplates whether to proceed with two more interest-rate increases planned for this year.

Federal Reserve policy makers are set to meet next week, and while there is little expectation that an interest-rate increase will be announced when the meeting ends on Wednesday, the latest economic reading could sway the Fed’s outlook. The monthly report on job creation is due next Friday, and a strong showing could ease some of the concern over the lack of vigor in the first quarter.

Photo

A Carmax salesman showing a vehicle in Doral, Fla. Spending on goods was slow in the first quarter of the year, despite rising consumer confidence since President Trump’s election.

Credit
Scott McIntyre for The New York Times

The job market has proved remarkably resilient even as quarterly growth has wobbled, and the unemployment rate sank to 4.5 percent in March, the lowest in nearly a decade.

Those seeking encouraging news about the first quarter could find it in separate reports on Friday. The Labor Department said an index reflecting labor costs had its best showing in almost a decade, indicating that falling unemployment and faster hiring is translating into better wages — something notably absent in the recovery until recently.

Reaffirming its recent findings, the University of Michigan said its consumer sentiment index finished April with a decidedly bullish reading of 97, up from 87.2 just before the election.

The White House provided a statement saying the report on gross domestic product might have been influenced by seasonal factors, but “shows that we still have work to do to get the economic growth President Trump wants and expects.”

And in an interview with Fox News on Friday, Mr. Trump said that, with better trade deals, the United States should be able to lift the rate of economic growth to 5 percent or more in a few years.

With personal consumption accounting for nearly 70 percent of all economic activity, however, the administration will be hard pressed to lift growth substantially if consumers remain cautious about opening…

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