~ Where the Sun Will Never Set on Our liberty ~
The U.S. economy grew in the first quarter — but very, very, very slowly. Most economy watchers blame frigid winter weather for dampening forward progress but not everyone is convinced weather tells the whole story.
The Bureau of Economic Analysis’ advance estimate of first quarter 2014 real gross domestic product shows output produced in the U.S. grew at a glacial 0.1% rate. This is growth relative to fourth quarter 2013, when real GDP increased 2.6%. Economists were anticipating growth around 1.1%.
“Real GDP growth was quite a bit weaker than already feeble expectations,” wrote Guy Berger, U.S. economist at RBS, in a note on the results. ”Q4’s GDP report was the inverse of today’s – it had a relatively strong headline, ho-hum details (today we got a weak headline, ho-hum details).”
Most of the weakness came from trade and inventories which subtracted 80 basis points and 60 basis points from overall GDP respectively. According to BEA, the slowing growth also reflected a downturn in nonresidential fixed investment growth, as well as lower state and local government spending.
Federal government spending, on the other hand, picked up 0.7% but that growth come off of a quarter than included the 16 day government shutdown and a 12.8% decline. To the extent GDP grew, BEA said it was a reflection of a decreased in imports and an increase in personal consumption.
Berger pointed out that if we subtract trade and inventories we get real sales to final domestic purchasers up 1.5%. This, he wrote, “is nothing to write homes about” but is in line with the prior quarter. PNC economists Stuart Hoffman and Gus Faucher pointed out in a note that, “First quarter growth was a definite disappointment, but it does not reflect the U.S. economy’s true momentum. There was a big hit to growth from the weather, and the drags from inventories and trade will likely reverse in the second quarter.”
Steve Blitz, chief economist at ITG Investment Research, agreed that the rest of the year will likely be stronger than Q1, but questioned how much weather weighed on trade. “Looking through the rest of the report we see the cold hand of winter,” he wrote in an note, “although I am not sure to what extent the cold in the Midwest caused the level of exports to drop by $40.5 billion while imports only dropped $8.8 billion. Surely the supply chains weren’t frozen in only one direction.”
Berger noted that the surprisingly strong growth in consumer spending reflected growth in household and utility services spending and health care spending. The first, he wrote, likely reflects “heating costs due to the frigid winter weather east of the Rocky Mountains – which added 0.7 percentage points to real GDP growth. In all likelihood, this factor will reverse in Q2 as the weather normalizes (i.e. utilities could be a drag on growth).”
The price index for gross domestic purchases — which measures prices paid by U.S. residents — increased 1.4% versus 1.5% growth in the fourth quarter. Real personal consumption expenditures increased by 3%, compared to 3.3% in the fourth.
The S&P 500 , Dow Jones Industrial Average and Nasdaq Composite were all slightly in the red following the pre-market release. Improved economic data out since the quarter ended, however, has caused many people to minimize the weight they were placing on the figure even before it was released Wednesday morning.
BEA — a division of the Department of Commerce – will release its second Q1 GDP estimate on May 29.
Today’s GDP estimate is subject to a number of notable influences, including historically severe winter weather, which temporarily lowered growth in the first quarter. The report also shows the positive impact of the implementation of the Affordable Care Act which, together with continued slowing in health costs, helped strengthen the economy in the first quarter. The President will do everything he can either by acting through executive action or by working with Congress to push for steps that would raise growth and accelerate job creation, including fully paid-for investments in infrastructure, education and research, a reinstatement of extended unemployment insurance benefits, and an increase in the minimum wage.
What positive impact - they just keep pushing crap, repeat the lie, repeat the lie, repeat the lie.... is it truth now?
17 Facts To Show To Anyone That Believes That The U.S. Economy Is Just
#1 The homeownership rate in the United States has dropped to the lowest level in 19 years.
#2 Consumer spending for durable goods has dropped by 3.23 percent since November. This is a clear sign that an economic slowdown is ahead.
#3 Major retailers are closing stores at the fastest pace that we have seen since the collapse of Lehman Brothers.
#4 According to the Bureau of Labor Statistics, 20 percent of all families in the United States do not have a single member that is employed. That means that one out of every five families in the entire country is completely unemployed.
#5 There are 1.3 million fewer jobs in the U.S. economy than when the last recession began in December 2007. Meanwhile, our population has continued to grow steadily since that time.
#6 According to a new report from the National Employment Law Project, the quality of the jobs that have been “created” since the end of the last recession does not match the quality of the jobs lost during the last recession…
Lower-wage industries constituted 22 percent of recession losses, but 44 percent of recovery growth.
Mid-wage industries constituted 37 percent of recession losses, but only 26 percent of recovery growth.
Higher-wage industries constituted 41 percent of recession losses, and 30 percent of recovery growth.
#7 After adjusting for inflation, men who work full-time in America today make less money than men who worked full-time in America 40 years ago.
#8 It is har to believe, but 62 percent of all Americans make $20 or less an hour at this point.
#9 Nine of the top ten occupations in the U.S. pay an average wage of less than $35,000 a year.
#10 The middle class in Canada now makes more money than the middle class in the United States does.
#11 According to one recent study, 40 percent of all Americans could not come up with $2000 right now even if there was a major emergency.
#12 Less than one out of every four Americans has enough money put away to cover six months of expenses if there was a job loss or major emergency.
#13 An astounding 56 percent of all Americans have subprime credit in 2014.
#14 As I wrote about the other day, there are now 49 million Americans that are dealing with food insecurity.
#15 Ten years ago, the number of women in the U.S. that had jobs outnumbered the number of women in the U.S. on food stamps by more than a 2 to 1 margin. But now the number of women in the U.S. on food stamps actually exceeds the number of women that have jobs.
#16 69 percent of the federal budget is spent either on entitlements or on welfare programs.
#17 The number of Americans receiving benefits from the federal government each month exceeds the number of full-time workers in the private sector by more than 60 million.
I added some more:
#18 Welcome to Obama's America, a place where 50 and 60-year-olds are moving back in with their parents in order to survive terrible, ongoing economic conditions.
#19 China to surpass USA as world's largest economy this year.
#20 Recovery Has Created Far More Low-Wage Jobs Than Better-Paid Ones
“Fast food is driving the bulk of the job growth at the low end — the job gains there are absolutely phenomenal,” said Michael Evangelist, the report’s author. “If this is the reality — if these jobs are here to stay and are going to be making up a considerable part of the economy — the question is, how do we make them better?”
How do we make these jobs better - Groan. These people are clueless.
Historically bad weather, at least they're not blaming Bush.
If the fast food market is the bulk of the job growth, think of what is going to happen when they raise the minimum wage to $10.10. It'll put a huge dent in that market.
That report is dismal! That's a whole lot of destruction in 5 years!
Gris, I know that 40 years ago, even during Carter's recession and long gas station lines, I had more disposable income than I do today. Then, if asked if I could break a hundred, I always could, at any given time ~ even the day before payday. Now, maybe I do.
Katie wrote earlier today about how the United State's GDP grew at .1 percent, compared to estimates of 1.1 percent growth.
The White House's official report blamed "unusually severe" weather for the startlingly-low increase in GDP, noting that there had been record cold temperatures and intense snowstorms.
Curiously, the severe winter weather did not have a similar economic effect on our neighbor to the north, Canada. Canada's GDP grew by 2.5 percent, exactly what was forecast. Several Canadian cities experienced their coldest and snowiestwinters in decades.
Perhaps Canadians are heartier than Americans?
I know, huh, but of course they can't take responsibility for the damage they are causing, they just have to blame someone, or something, and remember if you disagree, you're racist.
How embarrassing for the White House! The other excuse frequently heard is -- the dog ate my homework!