Featured # Markets | 3 years ago

U.S. Economy Decelerates in First Quarter as Activity Weakens Widely

U.S. economic growth slowed sharply in the first quarter to its slowest pace in two years as consumer spending eased and a strong dollar continued to dent exports, but an increase in activity is predicted given a tough labor market. GDP gained at a 0.5% annual rate, the weakest since 1Q 2014, according the Labor Department in its advance forecast, also as businesses picked up efforts to cut unwanted merchandise filling up warehouses. Economists polled and forecasted the economy growing at a 0.7 percent rate in the first quarter., The economy great at 1.4% rate in the fourth quarter of 2015.

Next, an increase in growth in the second quarter, the Institute for Supply Management’s manufacturing and non-manufacturing surveys that are tightly connected to economic activity, rallied in the recent months. That was the slowest since the first quarter of 2015 and marked a slowdown from the fourth quarter’s 2.4% rate. Disposal household income after the consideration of taxes and inflation hiked 2.9% in the first quarter after gaining 2.3% in the previous period. Though consumer spending eased, inflation increased in the first quarter.

A price index in the GDP report that excludes food and energy costs gained at a 2.1 percent rate, the fastest in the last 4 years and an increase from the fourth quarter’s 1.3 percent pace. In the first quarter, businesses amounted $60.9 billion worth of inventory, down from $78.3 billion in the fourth quarter. Investors still remain confident and could be a dent on growth in the second quarter. Trade reduced 0.34% point from gross domestic product growth in the last quarter, with the dollar strengthening pressuring exports and constricting imports. Investment in equipment fell at an 8.6 percent rate, the steepest drop since the second quarter of 2009. Next, investment in mining exploration pulled back at a 39.6 percent rate in the fourth quarter. Lastly, there were healthy gains in residential investment in the first quarter, the only positive in the economy.

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