Heckuva job, Barry: US economy shrinks in first quarter
Slow growth. No growth. How about less than zero growth?
The Obama economy continues to impress with its amazing lack of resiliency. Throw a little cold weather into the mix and whaddya know? The economy actually shrinks.
Gee - you'd think we were in a recession or something.
The U.S. 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 on Thursday revised down its growth estimate to show gross domestic product shrinking at a 1.0 annual rate.
It was the worst performance since the first quarter of 2011 and reflected a far slower pace of inventory accumulation and a bigger than previously estimated trade deficit.
The government had previously estimated GDP growth expanding 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.
We pause here to reflect on how Reuters tries to be helpful in explaining why the economy contracted and why the original estimate was so wildly off base. What they refer to as "sharp revisions" not being "unusual" is a laughable understatement. And as far as the weather is concerned, if the economy were growing at even a semi-healthy rate - 3-4% - we would still have had positive growth.
The Reuters attempt at spin is pathetic.
The decline in output, which also reflected a plunge in business spending on nonresidential structures, was sharper than Wall Street's expectations. Economists had expected the revision to show GDP contracting at a 0.5 percent rate.
The economy grew at a 2.6 percent pace in the fourth quarter. U.S. financial markets are likely to shrug off the report, given the temporary factors that weighed down on growth and the fact that economic activity is rebounding.
Data ranging from employment to manufacturing suggests growth will accelerate sharply in the second quarter.
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.
Fewer workers are filing for unemployment, but more workers are leaving the workforce. Housing starts are up, but sales are down. Exports are down, imports up, inventories down - like Obama himself, the economy can;t seem to make up its mind whether it wants to grow or not.
Indications are that the second quarter will be much stronger than the first as the weather warms and construction picks up in the north. But the number of discouraged workers has been increasing the last year and the administration does not appear to have an answer for it.