The U.S. economy barely grew in the first quarter as another cold and snowy winter discouraged consumer spending and exports and business investment declined.
The Commerce Department said the nation’s gross domestic product grew by just 0.2 percent, although that was a significantly better performance than in the same quarter a year earlier, when the economy contracted by 2.1 percent. Reuters said economists expected 1 percent growth in this year’s quarter.
Last year, economists put much of the blame for a poor first quarter on harsh weather. This year, the Wall Street Journal reported, there appeared to be multiple reasons for the disappointing performance, including disruptions at West Coast ports, the stronger dollar’s effect on exports and the effects of cheaper oil.
Last year’s weak opening quarter was followed by growth that averaged 4.8 percent in the second and third quarters, giving economists reason to hope for better results as 2015 advances.
"The extent and depth of the weakness in [Wednesday’s] GDP report sets the U.S. up for another disappointing, though somewhat better GDP report in the second quarter,” Scott Anderson, chief economist at Bank of the West in San Francisco, told Reuters. “We are not ready to throw in the towel for the year.”
“We believe weakness was grossly exaggerated, and there will be significant catch-up in Q2, but, of course, that remains to be seen,” Jim O’Sullivan, chief United States economist at High Frequency Economics in Valhalla, N.Y., told the New York Times.
Economists estimate that unusually cold weather in February chopped off as much as half a percentage point of growth and the port disruptions shaved off an additional 0.3 percentage point, Reuters said.
The effects of the bad weather were evident in weak consumer spending. Growth in consumer spending, which accounts for more than two-thirds of U.S. economic activity, slowed to a 1.9 percent rate. That was the slowest in a year and followed a brisk 4.4 percent fourth-quarter pace.