Economy grew at 0.2 percent rate in first quarter
Repeating an all-too-familiar pattern, the U.S. economy slowed to a crawl in the first quarter of 2015, weighed down by a weaker trade performance, falling business investment and still-cautious consumers.
At 0.2 percent, the annualized growth rate last quarter was better than the winter wipeout in the first quarter of 2014, when the economy contracted at a 2.1 percent rate. But the figures released Wednesday by the Commerce Department confirm other signals in recent weeks that the economy, which was hit again by harsh weather in large portions of the nation, began 2015 by treading at water at best.
“The U.S. economy stumbled badly in the first quarter,” said Scott Anderson, senior vice president and chief economist at Bank of the West in San Francisco. “Modest growth in the fourth quarter of 2014 turned into virtually no growth in the first quarter of 2015.”
The anemic showing was led by two areas that were especially weak: net exports and business investment.
Hurt by the stronger dollar and the lingering effects of a labor dispute that slowed activity at West Coast ports, net exports fell 7.2 percent in the first quarter, which shaved nearly a full point off the overall growth figure.
Plunging investment by businesses also weighed on the U.S. economy, a trend some experts attribute to big cuts in spending in the energy sector, as falling oil prices prompted drillers and oil production companies to pull back on new projects.
Still, even with the disappointing start to the year, most experts expect growth to rebound later in 2015, much as it did last year.
“We believe weakness was grossly exaggerated, and there will be significant catch-up in Q2, but, of course, that remains to be seen,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics in Valhalla, New York.
Economists had expected a weak showing before the report. The consensus view called for a 1 percent growth rate in January, February and March, well below the 2.2 percent rate in the final three months of 2014.
This is the first of three estimates of economic growth the Commerce Department will release, and the number could be revised sharply upward or downward. The next estimate will come out on May 29.