According to the WSJ (LINK), the US economy contracted (GDP fell at a 0.7% annual rate) during the first quarter of 2015. This is far worse than the initial estimate that showed about 0.2% growth.
Economists are blaming the shortcoming on: harsh weather, a strong dollar and a labor dispute at West Coast ports. These have weakened the demand for American goods at home and abroad.
The Fed views the first-quarter stumble largely due to “transitory factors—such as the stronger dollar—that will dissipate in coming months. The central bank is looking for signs of a rebound soon as it plots when and how quickly to raise short-term interest rates, which have been near zero since December 2008 to stir economic growth.”
Even though we saw a contraction in GDP for the first three months of 2015, “other signs point to the economy humming along at a steady, though modest, growth pace. Company layoffs are exceptionally low and hiring across the U.S. remains solid. Mortgage applications are up amid other signs of growing housing demand.”
“We’re still growing at a relatively steady pace, although one that just doesn’t feel satisfying,” said Richard Moody, chief economist at Regions Financial Corp. “Six years into the recovery, we still really haven’t absorbed all of the idle capacity in the economy. When your underlying trend of growth is so slow, it doesn’t take much to just kind of stop the train.”
Do you have any general thoughts or comments about this article?
Do you think our economy will show growth now that our brutal winter has come to an end?
It seems our economy is doing fairly well (low unemployment level and bump in the housing market) as of late. This prompted the question, is GDP the best measurement of how our economy is working or could there be another evaluating tool more accurate? (Sparked by our in class discussion about Stiglitz last week)