The U.S. economy grew at a faint annual rate of 0.1 percent annualized growth during the first three months of this year, the government said Wednesday in a report that underscored the hurdles still weighing against a fuller recovery.
After a solid 2.6 percent growth rate for the final three months of 2013, mainstream economic forecasters had expected lackluster annualized growth in the range of 1 percent to 1.5 percent for the first quarter. But those minimal hopes were dashed when the Commerce Department reported a number for gross domestic product_ the broadest measure of goods and services in the economy_ that was as close zero growth as it gets for the three-month period.
“The economy hit an air pocket at the start of the year. Bad weather, the expiration of the unemployment insurance program and less inventory accumulation all temporarily weighed on growth,” Mark Zandi, chief economist for forecaster Moody’s Analytics, told McClatchy. “The economy should bounce back strongly in the current quarter.”
The terrible winter weather that gripped much of the nation in January and February got a lot of blame for Wednesday’s weak number.
“Consumer spending on food services and accommodations fell for the first time in four years, one of several components that was likely affected by unusually severe winter weather,” Jason Furman, head of the White House Council of Economic Advisers, said in a statement. “Exports and inventory investment, two particularly volatile components of GDP, also subtracted from growth.”
This being a midterm election year, Republicans pounced the on the bad news.
“This report is more than a low number; it is a reflection of the real economic despair that persists in the sixth year of the Obama presidency,” said Brendan Buck, spokesman for House Speaker John Boehner, R-Ohio.
The brutal winter weather kept consumers out of the malls, and left goods sitting at docks or in loading terminals. Businesses also sharply cut back their replenishment of inventories. It’s why some economists expect a snapback in the second quarter and an upward revision to the growth number.
“To be fair, I would not be surprised if this figure is revised upward somewhat when the March data comes into clearer focus, which had already indicated a rebound from weather-related softness in the prior two months,” wrote Chad Moutray, chief economist for the National Association of Manufacturers, in his blog Shopfloor.org.
Growth in international trade has been an important component of the recovery from the Great Recession, but exports slowed to an annual rate of 7.6 percent over the first three months of 2013. That’s one of the biggest drops since the end of the recession in spring of 2009 and is due to weather but also global factors. They include a continued slowdown in Europe, fueled partly by ongoing unrest at the Russia-Ukraine border, and China’s slowing economy also weighed on exports.
“The big decline in equipment investment and exports were especially disappointing. Both have to pick up significantly if the economy is going to grow 3 percent this year as widely anticipated,” said Zandi.
Another key signpost for the economy comes Friday when the Labor Department reports on employment and unemployment for April. Hiring has grown over the last six months, and Friday is expected to show another strong month, A private-sector gauge of hiring released on Wednesday_ the ADP National Employment Report_ showed that private employers added 220,000 payroll jobs in April, building on a similarly strong number for March.