Economy started year slowly, but will likely pick up pace, market watchers say

Consumers may have pulled back the reins on spending in the first quarter, slowing economic growth, but economists say it is expected to be only a temporary pause.

The federal government’s latest gross domestic product report will be released before the start of trading Friday morning.

Growth probably increased at a 2 percent annual rate, according to a Reuters survey of economists, who say it was held back by a moderation in business spending on equipment as well as a widening of the trade deficit and a decline in investment in homebuilding.

The economy grew at a 2.9 percent pace in the fourth quarter of 2017.

While a slowdown isn’t uncommon in the first quarter of a year, it may not be a true reflection of the economy.

The labor market is near full employment and both business and consumer confidence are strong.

The economy is expected to get a boost in the second quarter as the impact of the Trump administration’s tax cut package begins to be felt in paychecks.

The administration continues to focus on a 3 percent growth target.

Consumer spending in the last quarter was likely held back by delayed tax refunds and impact of tax cuts. The cost of rebuilding and clean-up efforts following hurricanes late last year probably also affected first-quarter spending.

Keep in mind that consumer spending accounts for more than two-thirds of U.S. economic activity.

 Reuters contributed to this article.