News / Economy

US Economy Shrinks 1 Percent in First Quarter

US Economy Shrinks 1% in First Quarteri
X
Mil Arcega
May 29, 2014 9:48 PM
A harsh winter appears to have battered the U.S. economy more than first thought. The Commerce Department says the economy actually shrank a full percent in the first three months of the year - worse than initial estimates that showed the economy grew, but just barely, by one tenth of one percent between January and March. The latest estimate of gross domestic output marks the first contraction in three years. But as Mil Arcega reports, analysts are confident the slowdown is temporary.
A harsh winter appears to have battered the U.S. economy more than first thought. 

The Commerce Department says the economy actually shrank a full percent in the first three months of the year - worse than initial estimates that showed the economy grew, but just barely, by one-tenth of one percent between January and March.

The latest estimate of gross domestic output marks the first contraction in three
US GDP Change per Quarter (CLICK TO ENLARGE)US GDP Change per Quarter (CLICK TO ENLARGE)
x
US GDP Change per Quarter (CLICK TO ENLARGE)
US GDP Change per Quarter (CLICK TO ENLARGE)
years.  But, analysts are confident the slowdown is temporary.

A colder than expected winter gets much of the blame for the slowdown in U.S. productivity, but analysts say it’s more complicated than that.  

“Consumers spent at a healthy rate in the first quarter despite the nasty weather in the eastern two-thirds of the country," said Mark Hamrick, the Washington bureau chief at Bankrate.com. "It was really businesses holding back the economy."

Hamrick says businesses may have inadvertently slowed U.S. growth - reducing their stockpiles of inventory and cutting back on investments in anticipation of reduced consumer demand.

​On Wall Street, investors seemed unfazed by the disappointing news - with the major stock indexes remaining in positive territory.

Hamrick says that’s because investors are already looking forward to the rest of the year.

“We’re really more concerned about what’s happening in the current quarter on out towards the second half of the year," he said. "And it's widely believed that growth in the current quarter is really making up for, perhaps even more than making up for - that contraction in the first quarter."

Some estimates suggest the U.S. economy could grow between 4 and 5 percent in the second half of 2014. Less certain is the outlook for the housing market.  

RealtyTrac’s Daren Blomquist says home sales and prices have slowed dramatically since 2013.

“We are seeing decreases in sales volume in the first quarter and even into April, but I don’t think it’s just about the weather," he said. "I think the more fundamental issue is the low inventory."

Economists say the smaller inventories may be the result of fewer Americans losing their homes to foreclosure - along with tighter bank lending guidelines.

On the bright side, the U.S. job market continues to improve.  A new report shows the number of unemployed workers seeking government assistance fell by 27,000 this week - that's close to a seven-year low reached earlier this month.

You May Like

India PM Modi's party distances itself from religious conversions

BJP under fire for being slow to rein in hardline affiliate groups allegedly trying to promote a Hindu-dominant agenda by luring Muslims and Christians to convert to Hinduism More

Anti-Whaling Group Found in Contempt of Court

Radical environmentalists who threw acid and smoke bombs at Japanese whalers in the waters off Antarctica continue their campaign to disrupt Japan's annual whale hunt More

UN's Ban Urges End to Discrimination Against Ebola Workers

Ban was speaking in Guinea on the second day of a whistle-stop tour aimed at thanking healthcare workers of the countries at the heart of the epidemic More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Sudan School Becomes Target of Aerial Attacksi
X
December 19, 2014 12:45 AM
The school dropout rate is at an all-time high in Sudan's South Kordofan state because many schools have been destroyed during the three-year civil war between the government and SPLA-N rebel forces. Adam Bailes visited Sudan's Nuba Mountains' region and reports many children are simply too scared to go to school
Video

Video Sudan School Becomes Target of Aerial Attacks

The school dropout rate is at an all-time high in Sudan's South Kordofan state because many schools have been destroyed during the three-year civil war between the government and SPLA-N rebel forces. Adam Bailes visited Sudan's Nuba Mountains' region and reports many children are simply too scared to go to school
Video

Video VOA Reporter Tours Devastated Peshawar School

Islamist militants wearing military uniforms and strapped with explosives attacked a military run school Tuesday in the northwestern Pakistani city of Peshawar. At least 141 people were killed in the horrific attack, most of them young students. VOA reporter Ayaz Gul visited the devastated school and attended the funeral of the principal who courageously tried to save her students from the deadly attack.
Video

Video Nigerians Fleeing Boko Haram Languish in Camp Near Capital

In its five-year effort to impose Islamic law in northeastern Nigeria, the Boko Haram extremist group has killed thousands of people and forced hundreds of thousands to flee. Some of those who ran for their lives now live in squalor on the edges of the capital, Abuja. Chris Stein reports for VOA.
Video

Video Putin Says Russian Economy Will Emerge Stronger

Russian President Vladimir Putin has said his country's sinking economy will not only recover but also become stronger, despite falling oil prices and Western sanctions over Ukraine. VOA's Daniel Schearf reports.
Video

Video Detained Turkish Journalists Follow Teachings of US-Based Preacher

The Turkish government’s jailing of critical journalists has sparked international condemnation and is being seen as an effort to undermine the followers of an ailing Turkish preacher based in the United States. VOA religion reporter Jerome Socolovsky has more.
Video

Video ‘Anti-Islamization’ Marches Increase Tensions In Germany

Anti-immigrant rallies in Germany have been building in recent weeks, peaking Monday night in the city of Dresden where tens of thousands of people turned out to demonstrate against what they call the ‘Islamization’ of the West. Germany has offered asylum to more Syrian refugees than any other country, and this appears to have set off the protests. Henry Ridgwell reports from London.
Video

Video Aceh Rebuilt Decade After Tsunami, But Scars Remain

On December 26, 2004 there was an earthquake in the Indian Ocean so powerful it caused the Earth’s axis to wobble a few centimeters. Onshore on the island of Sumatra, the resulting tsunami was devastating. A decade later, VOA Correspondent Steve Herman reports from Banda Aceh, Indonesia, where although there is little remaining evidence of the physical devastation, the psychological scars among survivors remain.
Video

Video Refugees Living in Kenya Long for Peace in the Home Countries

Kenya is host to numerous refugees seeking safe haven from conflict. Immigrants from Somalia face challenges in their new lives in Kenya. Ahead of International Migrants Day (December 18) Lenny Ruvaga has more for VOA News from the Kenyan capital.

All About America

AppleAndroid

World Currencies

EUR
USD
0.8143
JPY
USD
119.23
GBP
USD
0.6390
CAD
USD
1.1596
INR
USD
63.304

Rates may not be current.