Lower than expected levels of spending on personal consumption and declining exports and imports forced the federal government to lower its third gross domestic product growth estimate for the first quarter from 2.4% to 1.8%.
The Bureau of Economics Analysis releases updates on GDP growth after thoroughly studying goods and service output levels across the U.S.
While the decline in GDP growth is partly blamed on drops in federal and state government spending, residential-fixed investment remained somewhat strong, suggesting the Fed’s long-term policy of buying mortgage mortgage bonds continues to booster the housing sector.
Real residential fixed investment grew 14% during the period, compared with a prior increase of 17.6%. Meanwhile, real nonresidential-fixed investment grew only 0.4% in the first quarter, the BEA said.
Lower GDP is negative for the entire economy, but arrives in the wake of relatively positive reports on home sales and prices.
Still, even with home prices increasing, the nascent housing recovery remains the subject of debate.