US economic growth revised down

The US government revised its reading on first-quarter gross domestic product (GDP) to an annual growth rate of 3%. The figure was below expectations of 3.3%, according to a consensus of economists. The initial reading, released last month, was a 3.2% rate. But the revision also showed that the rate of consumer spending has doubled since the fourth quarter of 2009, and remains consistent with the forecast for annual GDP to grow between 3% and 3.5% in 2010. Consumer spending, which accounts for about 70% of the US economy, rose at a 3.5% pace last quarter, compared with the 3.6% the government estimated last month. Consumer spending rose by 1.6% in the previous three months. The first-quarter increase was the biggest since 2007.

Company earnings increased 5.5% in the first quarter after climbing 8% in the previous three months. Profits were up 31% from the same time last year, the biggest year-over-year gain since 1984. Business spending on new equipment and software advanced at a 12.7% pace last quarter after growing at a 19% rate the previous three months, the biggest gain since 1998, the GDP report showed. Spending on structures, including office buildings and factories, dropped at a 15.3% pace in the first quarter. The GDP report was the second for the January to March quarter and will be revised in June as more information becomes available to the government.