04.29.15
Analysts blamed cold winter weather and a strong US dollar for the anemic 0.2% gain posted by the US economy in the first quarter of 2015. Last year, the economy increased 3%. In fact, analysts say all the snow in the Northeast caused a 1% decline in GDP for the January-March period. For the record, the first quarter was the third-coldest in 20 years, and it was only the fourth time in 60 years with three or more severe snowstorms in the economically important Northeast states. At the same time, the surging US dollar, coupled with weakness among US trading partners, cutting GDP growth by 1%, according to figures released by the government’s Bureau of Economic Analysis. Exports dropped $39 billion in the first quarter. Add to that, the collapse in oil prices caused a 0.6% contraction in the US economy for the period, as analysts noted that investments in oil wells and other mining structures fell at a 49% annual rate in the quarter in response to lower oil prices. Adding to all of that, a major labor dispute at key West Coast ports earlier this year that’s since been settled also disrupted the flow of trade. As a result, exports sank 7.2% in the first three months of the year, while imports edged up 1.8%, the Commerce Department said.
On the flip side, inventory growth was particularly strong, adding 0.75 percentage points to GDP. Investments in research and development surged at the fastest pace since the records began in 1999, adding 0.2 percentage points to growth. Looking ahead, steady consumer spending, fueled by a surge in hiring over the past few years and a plunge in gasoline prices, is expected to keep the economy on track for stronger growth in Q2 and beyond. Most economists predict a rebound soon in a replay of what happened in 2014, when a 2.1% decline in first-quarter GDP spawned by harsh winter weather was followed by outsized gains of 4.6% and 5% in the spring and summer.
In February, the BEA said personal income rose 0.4%.
On the flip side, inventory growth was particularly strong, adding 0.75 percentage points to GDP. Investments in research and development surged at the fastest pace since the records began in 1999, adding 0.2 percentage points to growth. Looking ahead, steady consumer spending, fueled by a surge in hiring over the past few years and a plunge in gasoline prices, is expected to keep the economy on track for stronger growth in Q2 and beyond. Most economists predict a rebound soon in a replay of what happened in 2014, when a 2.1% decline in first-quarter GDP spawned by harsh winter weather was followed by outsized gains of 4.6% and 5% in the spring and summer.
In February, the BEA said personal income rose 0.4%.