U.S. economy shrinks in first quarter for first time since 2011 (Mercado de Dinero)

Jueves, Mayo 29 2014 11:00 | Escrito por Redacción

 

The U.S. economy contracted by 1% in the first quarter to mark the biggest decline in three years, hampered by harsh winter weather that disrupted business operations and construction on residential and commercial properties, according to newly revised government figures.

The nation’s gross domestic product in the first three months of 2014 fell at a 1% annual rate, vs. the 0.1% increase first estimated, the Commerce Department said Thursday.

Initially the Commerce Department had reported last month that gross domestic product rose at an annual 0.1% pace in the first three months of 2014. The decline in first-quarter growth mainly stemmed from lower investment, especially in new housing, offices and plants. Business investment in structures was revised to show a sharp 7.5% drop instead of a small 0.2% gain.

Residential investment fell by 5%. Companies also restocked warehouses at a much slower pace. The increase in inventories, which adds to GDP, was slashed to $49 billion from an originally reported $87.4 billion. Inventories had grown by more than $100 billion in each of the last two quarters of 2013. Adjusted corporate profits, meanwhile, sank by 9.8% in the first quarter, the biggest decline in almost six years. Profits had set a new record in the fourth quarter, however.

U.S. exports fell 6% while imports actually rose 0.7% instead of falling by 1.4%. Softer net exports also subtracted from first-quarter growth. Consumer spending climbed 3.1%, a tick higher than previously reported. Inflation as measured by the PCE index rose at a 1.4% annual pace, or by 1.2% excluding food and energy, little changed from the preliminary estimate.

Economists expect growth to accelerate this year now that consumers have shed much of the debt they amassed in the mid-2000′s and federal government spending cuts have eased. The housing recovery, meanwhile, is expected to regain momentum after faltering in the first quarter.