US economy grew at slightly faster 1.1 percent pace in Q1

US economy grew at slightly faster 1.1 percent pace in Q1

The U.S. economy expanded at slightly faster pace in the first three months of the year on stronger export sales, better growth in housing and less drag from business investment.

Growth picked up to a 1.1 percent annual pace in the January-March quarter, modestly better than the 0.8 percent rate reported in May, the Commerce Department reported Tuesday.

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Jason FurmanJason FurmanIn surprise, unemployment rate falls, economy adds jobs Overnight Health Care: Global coronavirus cases top 1M | Cities across country in danger of becoming new hotspots | Trump to recommend certain Americans wear masks | Record 6.6M file jobless claims The Memo: Scale of economic crisis sends shudders through nation MORE, chairman of the Council of Economic Advisers, said that while strong growth in residential investment boosted growth “weakness in business investment, exacerbated by weak foreign demand and low oil prices—weighed on growth.”

“Going forward, increased uncertainty, including uncertainty regarding the consequences of British voters' decision last week to leave the European Union, underscores the importance of proactive policy steps to strengthen the U.S. economy,” Furman said in a statement. 

Strong growth — a 15.6 percent increase — in residential investment boosted real growth, he said.

To boost the economy's expansion, President Obama will continue to push for investments in infrastructure and job training and passing trade deals like the Trans-Pacific Partnership, Furman said.

Gus Faucher, PNC's deputy chief economist, said even though first quarter growth has been upwardly revised twice, gross domestic product is “still disappointing.” 

"The pace of the recovery has been weaker than the average, but the good news is that with OK, but not great growth, the economy has not developed imbalances that would indicate a recession is coming soon," Faucher said. 

After a slow start to the year, expectations for the April-June period are running around 2.5 percent.

Consumer spending increased 1.5 percent at an annual rate in the first quarter, below its 2.7-percent pace over the previous four quarters, Furman said.  

But spending in the past few months has rebounded and should help boost second quarter growth, producing a better outlook for the nation's economy in the months ahead, he said.

But last week's British vote to leave the European Union is ramping up uncertainty about the nation’s continued pace of growth.

After a nearly 900-point drop in the Dow Jones industrial average on Friday and Monday, the market rallied on Tuesday and was up nearly 200 points.

The British vote to exit the EU is expected to halt any interest rate increases by the Federal Reserve, possibly through this year. 

On Friday, Mark Zandi, chief economist with Moody's Analytics, told CNN that unless the British exit signals a broader splintering within the EU, then "I don't think the fallout on the American economy will  be that significant. We'll be just fine."