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Wednesday, April 30, 2014

U.S. Economy Grew a Tepid 0.1% in 1st Quarter

Real GDP growth slowed in the first quarter to 0.1% from 2.6% the quarter prior. It’s the slowest quarterly growth since the end of 2012. Consumption was the only category that grew in the 1st quarter. The harsh winter weather likely contributed to the sharp decline, particularly investment and net exports. GDP should rebound in the 2nd quarter.



Consumption contributed 2.0% to GDP growth in the first quarter and grew by 3.0%. Fixed investment declined, with losses in contribution to GDP in both residential and nonresidential by 0.2% and 0.3%. Inventories, which fluctuate quarter to quarter, reduced GDP by 0.6%. However inventories jumped in the third quarter of 2013 and will likely rebound in the 2nd quarter of 2014. Net exports dragged 0.8% on GDP growth.



The government dragged on the economy by 0.1% in the first quarter. State and local finances are improving and the federal budget is set for the next two years, which is why the drag was less than the 4th quarter.

Read the BEA report.

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