Friday, May 29, 2015

Economy Turns Down

The Commerce Department released its second estimate of first-quarter GDP this morning, and as expected, a disappointing quarter has gotten worse. Where the first estimate showed that the economy had grown by just 0.2 percent last quarter, now Commerce estimates that it actually contracted by 0.7 percent.

One of the primary factors in the revision was that imports grew much faster than originally estimated. With the dollar still strong, it's no surprise that Americans have been buying more cheaper imported goods lately. Meanwhile, U.S. exports declined by the most since the first quarter of 2009, in the middle of the recession.

This result marks the third time since the end of the recession that the economy has shrunk for a quarter, following the first quarter of 2014 and the first quarter of 2011. Both those turned out to be temporary blips; let's hope this one is too.

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