United States economy expanded by 2.3% in Q1 2018

US economic growth slowed in the first quarter, largely the result of a deceleration in consumer spending that hit even though tax cuts fattened the wallets of many American households.

Those factors likely offset an increase in inventories. In the fourth quarter, real GDP increased 2.9 percent. The government will publish its snapshot of first-quarter GDP on Friday at 8:30 a.m. (1230 GMT).

The Atlanta Federal Reserve Bank ahd predicted 5.4 percent GDP growth for the first-quarter of 2018, up over one percent from its original January 29 first-quarter prediction. First-quarter GDP tends to be sluggish because of a seasonal quirk.

The slight pullback in the pace of business investment from the fourth quarter could have been due to the strong incentives businesses had to invest in the fourth quarter of previous year before the corporate tax rate declined from 35% to 21%.

Republicans who supported the administration's successful push to win passage of major tax cuts in December said the reports on wages and GDP growth were indications that the tax cuts and other parts of the Trump economic program were beginning to have an impact. The economy may expand 2.8% in 2018, according to the median of forecasts compiled by Bloomberg, before slowing in the following two years.

The pace of America's economic growth slowed in the first quarter, though it remains stronger than economists had predicted. That means that the range for the revised growth estimate is between 0.8 percent and 3.8 percent - a large enough spread to conclude that the initial report is little more than "statistical noise", Lavorgna wrote in a note to clients Friday.

Rep. Erik Paulson, R-Minnesota and chairman of the Joint Economic Committee, said that Americans are better off today than 16 months ago "thanks to tax reform and pro-growth policies".

Consumer spending, which accounts for more than two-thirds of the economy, eased to a 1.1% rate last quarter, its weakest in almost five years.

Minutes of the March 20-21 meeting published earlier this month showed policymakers "expected that the first-quarter softness would be transitory", citing "residual seasonality in the data, and more generally to strong economic fundamentals". Household outlays increased at 1.1% in the first quarter, down from 4% in the last quarter of 2017. The saving rate rose from the fourth quarter to the first, meaning households pocketed added disposable income rather than spending it. The CBO now expects GDP to be $6.1 trillion bigger by 2027 than it did before the tax cuts. Rebuilding and clean-up efforts following hurricanes late past year probably pulled forward spending into the fourth quarter. The tax cuts came into effect in January. A key category of business spending moderated slightly from the fourth quarter but remained robust.

"While we do not expect rising rates to crush equipment spending, a slowdown nevertheless appears in store", said Sarah House, a senior economist at Wells Fargo Securities in Charlotte, North Carolina. The European Central Bank is also holding firm on interest rates and continuing its stimulus package as the bloc struggles to grow. Government spending probably contracted after two straight quarterly increases. Spending is expected to accelerate in the second quarter after the U.S. Congress recently approved more government spending. A narrowing of the trade deficit added 0.2 percentage points to growth. Spending on durable goods like cars surged in the final months of 2017, possibly replacing those lost in the storms, and then receded in the first quarter. Nonresidential fixed investment, reflecting spending on commercial construction, equipment and software, rose at a 6.1% rate.