Econ­omy not quite so bad in the first quar­ter

GDP de­creased at a 0.2% an­nual rate in­stead of the 0.7% re­ported last month.

Los Angeles Times - - BUSINESS BEAT - By Ji m Puz­zanghera jim.puz­zanghera@latimes.com

WASHINGTON — The stum­ble in eco­nomic growth in the f irst quar­ter of the year wasn’t quite as bad as ear­lier es­ti­mated, ac­cord­ing to the latest and f inal re­vi­sion by the Com­merce Depart­ment.

Gross do­mes­tic prod­uct, the key mea­sure of eco­nomic ac­tiv­ity, de­creased at a 0.2% an­nual rate from Jan­uary through March, the depart­ment said Wed­nes­day.

That was an im­prove­ment over the 0.7% con­trac­tion re­ported last month but still down sharply from 2.2% growth in the fourth quar­ter last year.

The latest es­ti­mate of f irst- quar­ter growth was in line with an­a­lyst fore­casts. The Com­merce Depart­ment said ex­ports fell less than in the sec­ond es­ti­mate re­leased in May, while im­ports and con­sumer spend­ing had larger in­creases.

Still, the con­trac­tion was a dis­ap­point­ment in a year that many econ­o­mists hoped would show in­creased growth from the tepid pace of the re­cov­ery from the Great Re­ces­sion.

Caused largely by un­usu­ally bad win­ter weather and the la­bor dis­pute at West Coast ports, the f irst- quar­ter con­trac­tion was just the third since the re­ces­sion ended six years ago this month.

With those prob­lems over, the econ­omy is fore­casted to grow about 2% in the sec­ond quar­ter.

But the pace of growth re­mains be­low the econ­omy’s full po­ten­tial, held back by a ris­ing dol­lar that makes U. S. goods more ex­pen­sive abroad and a slow­down in the oil in­dus­try caused by lower prices.

The Com­merce Depart­ment said first- quar­ter con­sumer spend­ing was stronger than es­ti­mated last month, re­vised to a 2.1% in­crease from a 1.8% in­crease. But that was less than half the 4.4% rise in con­sumer spend­ing in last year’s f inal three months.

The latest re­vi­sion showed that ex­ports de­creased 5.9% in the f irst quar­ter, smaller than the 7.6% de­cline re­ported last month. Ex­ports had in­creased 4.5% in the fourth quar­ter. Im­ports rose 7.1% in the first quar­ter, up from an ear­lier es­ti­mate of 5.6%. Im­ports in­creased 10.4% in the fourth quar­ter.

The im­proved first- quar­ter data could spur Fed­eral Re­serve pol­i­cy­mak­ers to de­cide sooner rather than later to in­crease the cen­tral bank’s key short- term in­ter­est rate from the near zero per­cent level where it has been since late 2008.

Fed of­fi­cials de­clined to raise the rate af­ter their meet­ing last week, but will have another op­por­tu­nity next month. Econ­o­mists widely ex­pect an in­crease to 0.25% to come at the Septem­ber meet­ing.

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