investmentwatchblog.com / April 28th, 2016
U.S. Economy Grew in First Quarter at Slowest Pace in Two Years
The U.S. economy expanded in the first quarter at the slowest pace in two years as American consumers reined in spending and companies tightened their belts in response to weak global financial conditions and a plunge in oil prices.
Gross domestic product rose at a 0.5 percent annualized rate after a 1.4 percent fourth-quarter advance, Commerce Department data showed Thursday. The increase was less than the 0.7 percent median projection in a Bloomberg survey and marked the third straight disappointing start to a year.
Shaky global markets and oil’s tumble resulted in the biggest business-investment slump in almost seven years, and household purchases climbed the least since early 2015, the data showed. While Federal Reserve officials on Wednesday acknowledged the softness, they also indicated strong hiring and income gains have the potential to reignite consumer spending and propel economic growth.
“Even as there are lots of things still going for consumers, you look at confidence and spending and it’s close to the lows of the past few quarters — it’s hard to explain,” Millan Mulraine, deputy head of U.S. research and strategy at TD Securities USA LLC in New York, said before the report. “The headwinds will be somewhat diminished for growth” in the next few quarters, he said.Economists’ projections for GDP, the value of all goods and services produced in the U.S., ranged from gains of 0.1 percent to a 1.5 percent. This is the government’s first of three estimates for the quarter before annual revisions in July.
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