U.S. economy expands at slowest pace in three years

Gross domestic product, the value of all goods and services produced, rose at a 0.7 percent annualized rate after advancing 2.1 percent in the prior quarter, Commerce Department data showed Friday in Washington. The median forecast of economists surveyed by Bloomberg called for a 1 percent gain. Consumer spending, the biggest part of the economy, rose 0.3 percent, the worst performance since 2009.

The GDP slowdown owes partly to transitory forces such as warm weather and volatility in inventories, which supports forecasts for a rebound as high confidence among companies and consumers and a solid job market underpin growth. Even so, the weakness at car dealers could weigh on expansion, and further gains in business investment could depend on the extent of policy support such as tax cuts.

“There’s reason to think that some of the things that were weak in the first quarter should reverse in the second quarter, in particular consumption and inventories,” Michael Feroli, chief U.S. economist at JPMorgan Chase & Co., said before the report. “Labor income is starting to pick up and actually keeping consumer spending pretty well supported.”