The New York Federal Reserve’s Nowcast model showed the U.S. economy is expanding at a 1.79% annualized pace in the second quarter following disappointing data on retail sales and industrial output in April released earlier this week.

This was slower than the 2.20% growth rate calculated by the N.Y. Fed model a week earlier.

The economy grew at a 3.2% rate in the January-March period.

Meanwhile, the government said U.S. economic growth for the first quarter is likely to be revised lower after data on Friday suggested less consumer spending and investment in intellectual property products than initially estimated.

The findings of the Commerce Department's quarterly services survey, or QSS, come on the heels of data this week showing growth in manufacturing inventories in the first quarter was not as robust as initially estimated.

Before the QSS data, economists had expected that GDP growth for the January-March quarter would be trimmed to an annualized pace of 3.0 percent from a 3.2 percent rate.

Based on the QSS data, economists at JPMorgan and Action Economics estimated an additional one-tenth of a percentage point would be subtracted from the GDP estimate.

That suggests first-quarter GDP could be trimmed to a 2.9 percent rate when the Commerce Department's Bureau of Economics Analysis publishes its revision later this month.

"Data from the QSS point to modest downward revisions to the BEA's first-quarter estimates of consumer spending and investment in intellectual property products, which combined subtracted 0.1% percentage point from our growth tracking estimate," said Daniel Silver, an economist at JPMorgan in New York. 

The Atlanta Fed on Thursday lifted its economic-growth forecast to 1.2 percent, up from 1.1 percent on Wednesday. 

After Thursday morning's new residential construction release from the U.S. Census Bureau, the nowcast of second-quarter real residential investment growth increased from -5.4 percent to -3.6 percent.

The next GDPNow update is Friday, May 24.