US economy falls in Q1 for 1st time in 3 years
Print Edition
THE US economy contracted in the first quarter for the first time in three years as it buckled under the weight of a severe winter, but there are signs activity has since rebounded.
The Commerce Department yesterday revised down its growth estimate to show gross domestic product shrinking at a 1 percent annual rate.
The worst performance since the first quarter of 2011 reflected a far slower pace of inventory accumulation and a bigger than previously estimated trade deficit.
Gross domestic product growth was initially estimated to have risen at a 0.1 percent rate. It is not unusual for the government to make sharp revisions to GDP numbers as it does not have complete data when it makes its initial estimates.
The decline in output, which also reflected a plunge in business spending on non-residential structures, was sharper than Wall Street’s hopes for a 0.5 percent contraction pace.
The economy grew 2.6 percent in the fourth quarter.
But the decline in output does not appear to have persisted into the second quarter, and the factors that held down the economy are temporary.
The economy should rebound strongly as they fade. Economists estimate severe weather could have chopped off as much as 1.5 percentage points from GDP growth. The government, however, gave no details on the impact of the weather.
In a separate report, the Labor Department said first-time applications for state jobless benefits fell 27,000 to a seasonally adjusted 300,000 last week.
The four-week moving average for new claims, seen as a better measure of underlying labor market conditions as it irons out week-to-week volatility, hit its lowest since August 2007. That added to signs of strength in the jobs market.
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