Maybe now would be a good time to turn the sequestration cuts off.
The U.S. economy grew a lot slower in the first quarter than previously believed, mainly because of less consumer spending on services and weaker business investment. Gross domestic product rose by 1.8% in the January-to-March period, down from a prior estimate of 2.4%, the Commerce Department said Wednesday in the last of three regular updates. Economists polled by MarketWatch had expected growth to remain unchanged at 2.4%.
The increase in consumer spending – the main engine of the U.S. economy – was lowered to 2.6% from 3.4%. Americans did not spend as much on services such as health care and legal advice, the government said.
The original estimate was itself underwhelming, but a significant downward revision suggests economic growth is even more tepid than we’d been led to believe.
Much of the weakness is the result of government spending cuts, which continue to serve as a serious drag on the recovery. Congressional Republicans are aware of this … and yet they’re demanding more spending cuts anyway.
Overall, the nation has seen 14 consecutive quarters of economic growth, starting in mid-2009, when President Obama’s Recovery Act helped put the nation on stronger footing.
As for the image above, the chart shows GDP numbers by quarter since the Great Recession began. The red columns show the economy under the Bush administration; the blue columns show the economy under the Obama administration.