The U.S. economy closed out the first quarter of this year with slower economic growth compared to prior periods at 2.3 percent, according to a federal report Friday.

President Donald Trump campaigned on helping businesses and workers through economic growth. But the last couple of quarters have fallen below the three percent growth he has targeted. The Bureau of Economic Analysis (BEA) found economic growth increased at an annual rate of 2.3 percent in the first quarter of 2018.

The Gross Domestic Product (GDP) tracks the total dollar value of all goods and services produced over a specific time period. The GDP is commonly used to determine the economic performance of a country or region. University of Chicago Prof. Austan Goolsbee sees the latest numbers as just being modest.

“It’s not great, but it’s not bad,” Goolsbee, who teaches economics at the University of Chicago Booth School of Business, told InsideSources. “There was some good and some not so good in it. The good parts were an uptick in capital investments, and hopefully, that will continue. The increase in wages continues, and that’s a good trend.”

The BEA report found that nonresidential fixed investment, personal consumption expenditures, exports, private inventory investment, and government spending drove the increase. Imports also increased, which creates a drag on economic growth.

The BEA found in its previous report that economic growth increased at an annual rate of 2.9 percent in the fourth quarter of 2017. The third quarter of last year increased by 3.2 percent, while the second quarter saw a 3.1 percent increase. The first quarter of last year saw economic growth at only 1.4 percent.

The White House has looked towards regulatory and tax reform to accomplish its economic growth goals. Kiplinger staff economist David Payne expects more growth later this year as the economic effects of those policies begin to take hold. He adds that the modest growth in this report shouldn’t be a huge concern at this point. Kiplinger publishes research on business forecasts and personal finance advice.

“We shouldn’t read too much into it,” Payne told InsideSources. “In previous years we’ve had a pattern where the first quarter is much lower than the other quarters. That’s probably going to happen again this year. I suspect the growth for the rest of the year is going to be roughly three percent.”

Payne adds that it will be difficult to sustain a growth rate above three percent without significantly more labor market or productivity growth. But he is optimistic that the economy could show strength the rest of this year.

Goolsbee doesn’t put much credence in the idea that first quarter growth is expected to be lower just because it has been that way in recent years.

“My view has been that the economy is growing, but not as fast as the optimists want,” said Goolsbee, who served as a top economic advisor to the Obama White House. “Certainly not that over three percent sustained basis that they sowed into the budget. So I would say it was a modestly positive report, but we certainly hope that we can do better in the quarters to come.”

President Trump and congressional leaders were able to implement a massive overhaul of the tax code while also reducing many regulations and federal rules. The hope is to decrease tax and regulatory burdens so employers have more time and resources to invest into their businesses and employees.

The Great Recession and the sluggish recovery that followed hindered economic growth through much of the last decade. Former President Barack Obama oversaw the recovery throughout his administration with the economy showing more notable signs of a turnaround in recent years.

“We’re starting to see fairly strong momentum which we’d expect to continue to pick up,” Greg Daco, head of U.S. macroeconomics at Oxford Economics, told InsideSources. “Overall the economy remains on an upwards trajectory. When we look at the rest of the year we’d expect that with reduced tax burdens, increased spending, and a fairly solid overall global environment, we should expect growth.”

Daco agrees that economic growth in the most recent report was fairly moderate overall. But he does add that it was stronger than some recent first quarters and that we could expect stronger growth later this year since policy reforms might take a little bit of time before their effects are fully felt.

“In general the key elements in this report were essentially threefold,” Daco said. “On the private-sector front, the economy is showing signs of a fairly late cycle economy, but one that will be supported by additional stimulants. On the international front, you have imports and exports that are still growing at a fairly solid pace, but there is concern of protectionism. Finally, on the inflation front, we’re seeing an economy with reduced labor market slack and increased economic activity putting upward pressure on wages.”

The BEA report found that personal incomes increased to $182.1 billion in the first quarter – with the fourth quarter seeing more robust growth at $186.4 billion. A decrease in personal interest income, rental income, and nonfarm proprietors’ income were largely offset by accelerations in wages, salaries, and government social benefits.

The BEA notes that the first-quarter advance estimates are based on source data that are incomplete and subject to further revisions. The finalized report is scheduled to be released June 28.

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