1st Quarter Economic Contraction Deeper Than Expected
The American economy shrank by 0.7% in the first quarter, the government reported today. A contraction was expected despite the earlier Commerce Department announcement of 0.2% growth during the period. But the slide into negative territory was steeper than most had expected. And for once economists aren't pinning the lackluster result on hideous winter weather.
As a series of reports have demonstrated, US consumers all but collectively refuse to spend big on retail purchases. Personal consumption grew a sclerotic 1.8% last quarter compared to 4.4% late last year. Exports fell short of initial estimates, as did inventory growth. And crumbling oil prices earlier in the year stalled energy exploration. Yet the labor and, to a lesser extent, housing markets continue to improve. And talk of a recession has been muted. Still, the economy is tepid enough to virtually ensure the Fed won't boost interest rates until late this year.
