Jun 28, 9:16 AM EDT

US economic growth revised up to 1.1 percent rate in first quarter, helped by exports


AP Photo
AP Photo/Gene J. Puskar

Latest Business News
Hershey says its board unanimously rejected takeover bid by Oreo maker Mondelez

Stocks extend a rally into a 3rd day as worries continue to ease over Britain's vote to leave the European Union

Hershey says its board has unanimously rejected a takeover offer from Oreo maker Mondelez and that it provided "no basis for further discussion."

A takeover of Hershey by Mondelez would bring together some of the best-known chocolate and cookie brands under one company

Stocks are moving higher on Wall Street as traders feel less anxious about Britain's vote last week to leave the European Union

Multimedia
A district summary of the Beige Book
Measuring economic stress by county nationwide
Mall malaise: shoppers browse, but don't buy
Unemployment by the numbers
Family struggles with father's unemployment
Saying an affordable goodbye
Hard times hit small car dealer
Latest Economic News
Britain's main stock market is back above where it was before the vote to leave the European Union plunged the country into turmoil

Inflation in the 19 countries that use the euro rose to 0.1 in June, up from below zero but still far too weak to reassure the European Central Bank

Germany's unemployment rate edged below 6 percent in June, reflecting the robust state of Europe's biggest economy

US economic growth revised up to 1.1 percent rate in first quarter, helped by exports

Spain's central bank estimates the economy grew by 0.7 percent in the second quarter, down from 0.8 percent in the previous three-month period

South Korea's government lowered growth outlook for Asia's fourth-largest economy and planned a supplementary budget for a second year in a row as the global economy faces heightened uncertainty

Clinton and Trump have sketched out dueling economic visions that underscore their clashing ideas for energizing growth and hiring

Why Brexit endangers the global alliances that helped the West prosper in decades after WWII

The British were warned for weeks that voting to leave the European Union would result in economic pain _ now they'll find out whether it will

The United Kingdom's vote to leave the EU was driven by much of the same sentiment that's fueled Donald Trump's march toward the Republican presidential nod: a rejection of economic globalization and the elites who favor it by those who feel left behind

Interactives
Greece's Debt Threatens to Spread
State budget
gaps map
Auto industry problems trickle down, punish Tennessee county
Women give old Derby hats a makeover in tough economy
S.C. town deals with highest unemployment in South
How mortgages were bundled and sold as securities
Tracking the $700 billion financial bailout
Tracking the year's job losses
State-by-state foreclosures since 2007
Credit crisis explained
Presidents and their economic legacies
Lexicon of the financial crisis
Americans' addiction to debt

WASHINGTON (AP) -- The U.S. economy grew slightly faster at the start of the year than previously estimated, even though consumer spending posted the smallest gain in two years.

The gross domestic product expanded at an annual rate of 1.1 percent in the first quarter, an improvement from the 0.8 percent rate released last month, the Commerce Department reported Tuesday.

While growth prospects for the spring look even better, the shockwaves from Britain's decision to leave the European Union could spread to the U.S. economy in the coming months. Economists forecast growth of around 2.5 percent in the current quarter.

The latest revision reflected stronger export sales and less drag from business investment. The boost in export sales helped to turn trade from a drag on growth into a small positive to growth of 0.1 percentage point.

Offsetting those gains, consumer spending growth was revised down to 1.5 percent. That was the weakest showing since the first quarter of 2014. The result primarily reflected a slowdown in services such as health care.

"Because this revision was largely due to new March data, this suggests that the pace of growth increased slightly at the end of the quarter," economists at Contingent Macro Research said in a note to clients.

The first quarter represented the second quarter in a row of slower growth, the result of a number of factors including a harsh winter that sapped consumer spending. It followed the pattern of the past few years in which growth nearly stalled out in the first quarter only to show a solid rebound in the second quarter.

Economists are looking for a similar outcome this year with analysts predicting growth in the current quarter will be more than double the first quarter pace.

Analysts had been expecting further acceleration in the second half of this year, with some economists predicting growth could rise close to 3 percent. However, after the vote in Britain, many analysts have trimmed their forecasts for the second half to between 2 percent to 2.5 percent growth due to turbulence in financial markets that could depress consumer and business confidence. They also believe U.S. growth will be hurt by a further rise in the value of the dollar, which will hurt exports.

The Dow Jones industrial average fell 611 points on Friday, the first trading day after the British vote, the biggest loss since last August. The Dow fell another 260.51 points on Monday.

The impact from the British vote is expected to keep the Federal Reserve on hold. The Fed raised its key policy rate by a quarter-point in December and had expected to raise rates another four times this year. But after markets went into a tailspin at the beginning of the year, the Fed moved to the sidelines.

Various Fed officials a month ago had signaled they could be ready to raise rates again in June but then a dismal May jobs report put the Fed back on hold. While some economists had forecast a possible July rate hike, the British vote has many analysts believing the Fed could leave rates unchanged for the entire year or at most will hike only one time, probably in December.

© 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Learn more about our Privacy Policy and Terms of Use.