US economic growth slumps to slowest pace in three years
By
Barry Grey
29 April 2017
The US gross domestic product barely rose in the first three months of 2017, increasing by an annual rate of only 0.7 percent from the last quarter of 2016, according to a report released Friday by the Commerce Department. It was the slowest rate of economic growth since the first quarter of 2014.
The figure fell short of the already low consensus estimate of economists, who had predicted a 1 percent rise in the GDP. The first quarter performance was sharply lower than the final three months of 2016, when the economy grew by 2.1 percent.
The most important factor depressing economic growth was a virtual collapse in the growth of consumption, which tumbled to 0.3 percent from 3.5 percent in the previous quarter. Consumption accounts for some 70 percent of GDP in the United States. The first quarter consumption figure was the weakest since the end of 2009, when the official recovery from the severe recession that followed the 2008 Wall Street crash was just getting underway.
Just two months ago, economists were predicting that the first quarter output figure would be 2 percent, but recent months have seen a marked slowdown in consumer purchases, particularly of cars. The BBC quoted Paul Ashworth, chief US economist at Capital Economics, as saying, “Household spending was held down by a drop in motor vehicle sales from the near-record high at the end of last year and the unseasonably warm winter weather, which depressed utilities spending.”
While many economists brushed off the miserable GDP report as a fluke, the result mainly of temporary factors such as unusually warm weather, Carl R. Tannenbaum, chief economist at Northern Trust in Chicago, told the New York Times, “I have to be…