The U.S. economy grew by a disappointing 0.1 percent in the first three months of 2014, the slowest pace of expansion since late 2012.
Measuring the output of all good and services in the United States, the real gross domestic product is subject to seasonal fluctuations and subsequent revisions. Especially after a strong final quarter of 2013 and this winter’s icy temperatures and heavy snow, growth was expected to slow, but not as much as it did. Wall Street had anticipated a GDP of 1.2 percent.
The good news in Wednesday’s GDP report from the Bureau of Economic Analysis is that personal consumption spending rose by 3 percent. That increase was offset by a 7.6 percent drop in exports and a 5.5 percent drop in business spending on equipment.
Revised growth data for the first quarter will be released at the end of May, so Wednesday’s headline number could go up or down. But each quarter’s initial announcement attracts media attention, in large part, author Zachary Karabell told NewsHour economics correspondent Paul Solman, because it’s “the king of all statistics.” The GDP has come to represent the health of the U.S. and international economies, even if the growth it measures isn’t felt by average citizens, Karabell explained.
Solman also spoke with Steve Landefeld, director of the agency that calculates the GDP, about what factors into the metric and how it’s constantly evolving.
In a recent Making Sen$e segment, Paul explored alternative measurements of economic growth, including Maryland’s Genuine Progress Index, which considers environmental factors.
In other economic news Wednesday, private payrolls increased by 220,000 according to the monthly report from Automatic Data Processing. The ADP report precedes Friday’s unemployment data from the Bureau of Labor Statistics, but isn’t always a strong predictor of government data. Markets will be closely watching Wednesday’s policy announcement from the Federal Reserve’s Open Market Committee at 2 p.m. EDT. They are expected to reduce monthly bond purchases by another $10 billion.