US economy expands just 0.1% in Q1
The US economy barely expanded in the first quarter, as exports tumbled and business inventories decelerated amid the weather-related slowdown.
US gross domestic product expanded at an annual rate of 0.1 percent in the first quarter, down from the 2.6 percent annual rate the previous quarter, the Commerce Department reported today in Washington. A median estimate of market analysts polled by Reuters called for GDP to expand at a rate of 1.2 percent.
Economists say inclement weather may have shaved off as much as 1.4 percentage points from first quarter GDP growth.
The slight acceleration in GDP was attributed mainly to personal consumption expenditures, official data showed. This was partially offset by declines in private inventory investment, nonresidential fixed investment, residential fixed investment and state and local government spending.
The report came just hours ahead of a key Federal Reserve monetary policy announcement. The sharp drop in GDP growth could impact the Fed’s message as it sets to trim asset purchases for the fourth time in as many meetings. Since December, the central bank has pared asset purchasing by $30 billion.
The first quarter slowdown, while much more severe than expected, is likely temporary. Several batches of recent economic data ranging from employment to retail sales have shown considerable improvements, a sign the economy was turning the tide at the end of the first quarter.
The Labor Department will release April nonfarm payrolls numbers Friday. Economists expect the US economy to have generated more than 200,000 private jobs last month.
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