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The U.S. economy got off to a rocky start this year. That's according to the latest numbers from the Commerce Department. The economy grew at just 0.7 percent in the first quarter, the weakest rate in three years. Growth barely above zero is nobody's idea of boom time, but as NPR's Chris Arnold reports, it may not be as bad as it looks.
CHRIS ARNOLD, BYLINE: President Trump says his policies are going to dramatically boost economic growth. But this report seems to show that that is not happening yet.
BETSEY STEVENSON: I think that there's probably a lot of disappointment in the White House today.
ARNOLD: Betsey Stevenson was an economic adviser to President Obama, so she knows what it's like for a White House to get a weak report on the economy.
STEVENSON: They were hoping to see a big Trump bump in the Q1 GDP estimate. And obviously the only way to see that bump is to squint.
ARNOLD: But actually, Stevenson says if you do squint at this report and ignore the worst-in-three-years headline, there are actually some good signs for the economy. For one thing, she says in recent years, businesses have been too cautious to spend on better equipment and new technology. And she says that slowed down innovation and so-called productivity gains. Those are really important for a healthy economy. In this report, though, businesses were spending a lot more money in the first quarter.
STEVENSON: That is really exciting, and that suggests that we're moving into the right trajectory, that that will lead us to the higher productivity gains and the higher economic growth that investments and physical capital can generate.
ARNOLD: On the downside, though, consumer spending was very weak, the worst quarterly numbers since 2009. But in any one quarterly report, analysts say you don't want to make too much of the good or the bad. Randall Kroszner is a University of Chicago economist and a former governor of the Federal Reserve.
RANDALL KROSZNER: The U.S. economy is an enormous, massive thing, and to try to get all the numbers together really quickly is pretty tough.
ARNOLD: For some reason, the first quarter of every year has been particularly tough. That GDP growth number has come in low repeatedly, and then growth has bounced back in the second and third quarters. Kroszner expects to see that this year, too. Diane Swonk of DS Economics agrees. She's predicting a pretty good economy in the spring and summer.
DIANE SWONK: The underlying fundamentals were already there. The economy was improving as we moved into 2017.
ARNOLD: But Swonk says with the Trump administration, there are still some very big unknowns. Will those big tax cuts get through? Will infrastructure spending happen? What about NAFTA - not to mention the geopolitical risk, such as tough talk on North Korea.
SWONK: I think what's very important is uncertainty. I talk to a lot of CEOs, and there's sort of a deer-in-the-headlights kind of look right now about what the policy environment looks like coming out of Washington. And that's something we are concerned about going forward.
ARNOLD: But at least for now, job growth remains solid. Wages are rising. And most analysts think that the economy's on the right track. And this bad-looking GDP number probably doesn't mean too much. Chris Arnold, NPR News.
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