Growth in the U.S. economy almost came to a halt in the first quarter, a bout of weakness spurred by one of the worst winters in years. Gross domestic product rose at an annual rate of just 0.1% from January through the end of March, the weakest performance in three years, according to a preliminary estimate by the Commerce Department. Economists surveyed by MarketWatch had forecast growth to slow to a seasonally adjusted 1% from a 2.6% clip in the final three months of 2013. Wall Street expected a poor number, but the weakness appeared even more widespread than had been forecast. Investment in business equipment and residential home construction both declined, U.S. exports fell sharply, government spending dropped again and companies increased inventories at a much slower rate.
Pretty much everyone expected a rough GDP report this morning, but the preliminary estimate was even worse than predicted.
This figure will be revised twice more in the coming months.
Oddly enough, though, the discouraging figure isn't likely to cause panic or fear of an economic downturn. On the contrary, at least for now most see this as a temporary blip.
I heard this morning from Ian Shepherdson, Pantheon Macroeconomics' chief economist, who predicted growth in the second quarter "will be much better" -- perhaps around 3% GDP -- thanks to an expected rebound in retail sales and durable orders and production.
Still, from a political perspective, one would like to think federal policymakers would see a report like this and look for ways to give the economy a boost. Given Republicans' unyielding opposition to public investments, there is no credible scenario in which that's possible.
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.