NEW YORK (Reuters) - The U.S. economy is likely growing at a pace below 2 percent in the first quarter due to modest growth in consumer spending, the Atlanta Federal Reserve’s GDPNow forecast model showed on Tuesday.
The U.S. gross domestic product is on track to grow 1.9 percent in the first quarter, slower than the 2.1 percent rate that was the regional Fed’s prior estimate on Friday, the Atlanta Fed said on its website.
It said it downgraded its GDP outlook after data on factory activity in February from the Institute for Supply Management suggested a 3.1 percent growth in consumer spending, lower than its earlier estimate of 3.5 percent.
The lower spending figure was mitigated by a forecast rise in real estate and government outlays in the first quarter to 2.4 percent from an earlier 1.0 percent increase.
Earlier Tuesday, ISM said its index of national factory activity increased 1.3 points to 49.5 last month, the fifth straight month of contraction.
The Commerce Department said construction spending increased 1.5 percent to $1.14 trillion, the highest level since October 2007.
Reporting by Richard Leong; Editing by Chizu Nomiyama