Economists polled by Reuters had expected GDP growth would be revised up to a 0.9 percent rate.
Still, the weak performance at the start of the year is a blow to President Donald Trump’s ambitious goal to sharply boost economic growth rates. During the 2016 campaign Trump had vowed to lift annual GDP growth to 4 percent, though administration officials now see 3 percent growth as more realistic.
The Trump administration has proposed a range of measures to spur faster economic growth, including big tax cuts. But analysts are skeptical that fiscal stimulus, if it materializes, will fire up the economy given weak productivity and labor shortages in some areas.
There are signs GDP growth regained speed early in the second quarter, with industrial production accelerating in April. But hopes of a sharp rebound in growth have been tempered by weak business spending, a modest increase in retail sales last month, a widening of the goods trade deficit and decreases in inventory investment.
Economic growth in the first quarter was hobbled by a near stall in consumer spending and a sharp slowdown in the pace of inventory accumulation by businesses.
Growth in consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose at a 0.6 percent rate instead of the previously reported 0.3 percent pace. That was still the slowest pace since the fourth quarter of 2009 and followed the fourth quarter’s robust 3.5 percent growth rate.
Businesses accumulated inventories at a rate of $4.3 billion in the last quarter, rather than the $10.3 billion reported last month. Inventory investment increased at a $49.6 billion rate in the October-December period.
Inventories subtracted 1.07 percentage point from GDP growth instead of the 0.93 percentage point estimated last month.
Business spending on equipment was…