US Economy Slips in Q1

Is the US economy just under the weather or is it something more insidious? After taking a look at the economy for the first quarter of 2015, US gross domestic product declined at a 0.7% annual rate in the first three months of the year, according to a government report released today. While some in Washington would blame policy, others blame the weather. After all, much of the US was battered by winter storms during a good portion of the period in question.


Meanwhile, consumer sentiment dropped in May to a six-month low.The University of Michigan’s gauge of consumer sentiment fell to a final May reading of 90.7, compared with a final April level of 95.9. Economists had expected a final May level of 89.5, compared with a preliminary estimate of 88.6.

“Consumer optimism retreated in May as consumers adopted more modest prospects for a rebound following the economy’s dismal 1st quarter performance,” according to the University of Michigan.

Pollyannas point to the improving jobless rate as a sure sign that the economy is growing, albeit at a slower pace. Unfortunately, jobless rates are often a trailing indicator; i.e., employers keep adding staff even as wary consumers start cutting back on their purchases.


But regardless of what you think of the latest GDP numbers, remember that economic expansions don't go on forever. The US has been on an upswing since March 2009, and what goes up must come down…it just doesn't have to go all the way to the basement.