The U.S. government reported today that the economy grew at a 1.8% annual rate in the first quarter, below earlier estimates. According to Bloomberg, the 2% increase in U.S. payroll tax took a bigger bite out of consumer spending than previously calculated.
Regardless consumer confidence is higher.
“You’re not seeing a big pullback in consumer spending, it is just weaker than previously estimated,” said Daniel Silver, an economist at JPMorgan Chase & Co. in New York. “The housing recovery will continue to push forward. Overall growth is going to be stronger in the second half.”
According to Moody’s Analytics, the annual rate of growth in the second quarter is estimated to be 1.7%.