US economy grows just 0.2 percent in Q1

The US economy skidded to a near halt in the first three months of the year, growing at a barely discernible 0.2 percent annual rate. Plummeting exports, a harsh winter, and sharp cutbacks in oil and gas drilling slowed GDP to its worst showing in a year. 

Gene J. Puskar/AP/File
Roy Livesey marks a pallet of 2x4's at the Allegheny Millwork and Lumberyard in Pittsburgh. The US economy barely budged in the first quarter of 2015. The Commerce Department reported anemic 0.2 percent growth in first quarter GDO Wednesday, April 29, 2015.

The U.S. economy skidded to a near halt in the first three months of the year, battered by a triple whammy of harsh weather, plunging exports and sharp cutbacks in oil and gas drilling.

The overall economy grew at a barely discernible annual rate of 0.2 percent in the January-March quarter, the Commerce Department reported Wednesday. That is the poorest showing in a year and down from 2.2 percent growth in the fourth quarter.

Plummeting exports pulled growth down by nearly a full percentage point. The category that includes investments in oil and gas exploration drilling plunged 48.7 percent. Consumer spending slowed sharply as a severe winter kept shoppers home.

The tiny increase was much worse than economists had expected, but analysts are still looking for a solid rebound for the rest of the year.

The government's first look at overall economic growth for the first quarter, as measured by the gross domestic product, came as the Federal Reserve wrapped up two days of discussions on interest rate policies. The weak performance will delay any interest rates increases, analysts said.

"A stalling of U.S. economic growth at the start of the year rules out any imminent hiking of interest rates by the Fed," Chris Williamson, chief economist at Markit, wrote in a research report.

Economists are hopeful that growth will rebound this spring and summer. They are predicting that solid employment gains and rising consumer spending will help spur stronger growth.

The Fed is expected to acknowledge the economic slowdown in the statement it issues later Wednesday, while at the same time emphasizing its belief that the factors responsible were largely temporary.

At the Fed's March meeting, the central bank opened the door to a rate increase this year by no longer saying it would be "patient" in moving to raise interest rates. While economists had thought the change could mean the Fed might hike rates for the first time at the June meeting, the view now is that the weaker economic activity has pushed off the first rate increase until at least September.

Many economists forecast growth to rebound to around 3 percent in the current quarter and hold steady in the second half of the year.

The International Monetary Fund earlier this month projected that the U.S. economy would grow 3.1 percent this year. While that is a half-point lower than its January forecast, it would still give the United States the strongest annual growth since 2005, two years before the country fell into the worst recession since the 1930s.

The Great Recession ended nearly six years ago in June 2009, but growth since the recovery began has been sub-par, averaging just 2.2 percent. Despite the weak start, analysts believe 2015 will be the year when growth accelerates to a more respectable level.

You've read  of  free articles. Subscribe to continue.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.