US GDP Shrank 2.9% in Q1 Due to Bad Weather

The US economy suffered its worst performance for five years in the first quarter of 2014, latest figures show.

The economy shrank at an annualised rate of 2.9% in the first three months of the year, the third estimate from the US Commerce Department showed.

This was worse than the previous estimate of a 1% contraction, and also worse than economists’ expectations.

However, the economy is expected to have recorded a sharp recovery during the second quarter of the year.

The unusually cold weather in the first quarter of the year has been blamed for the poor performance of the economy.

However, the gap between the second and third estimates of US growth for the quarter was the largest on record.

The latest revision came as a result of a weaker pace of healthcare spending than previously assumed, which caused a downgrading of the consumer spending estimate.

Consumer spending – which is responsible for more than two-thirds of US economic growth – increased by 1% in the quarter, rather than the 3.1% rate as first estimated.

Trade was also a bigger drag on the economy than previously thought, with exports falling by 8.9% rather than a previously estimated 6%.

via BBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza