First-quarter U.S. GDP barely rises, up 0.1%
Washington (Apr 30) Growth in the U.S. economy slowed to a miserly 0.1% annual pace in the first quarter from 2.6% at the end of 2013, a bout of weakness spurred by one of the worst winters in years. Consumer spending, the main driver of the U.S. economy, actually rose 3% after a strong 3.3% gain in the fourth quarter, but the increase was driven mostly by higher outlays on utilities and health care, according to preliminary data released by the Commerce Department on Wednesday. Yet business investment on equipment, another key economic cog, fell 5.5% to mark the biggest drop in almost five years. Investment in home construction also fell for the second quarter in a row, down an annualized 5.7%.
The estimated increase in inventories was $87.4 billion, smaller than the record $100 billion-plus spikes in the third and fourth quarters of 2013.
Exports (-7.6%) fell faster than imports (-1.4%) to push the trade deficit higher and also act as a drag on growth.
Government spending rose at the federal level but declined by 0.5% overall because of cutbacks by states and localities. Excluding inventories, final sales of American-made goods and services softened to a 0.7% pace from 2.7% in the fourth quarter.
Inflation as measured by the PCE index rose at a 1.4% annual pace, or by 1.3% excluding food and energy. Over the past year the PCE index has risen just 1.1%. Inflation-adjusted disposable income, or the money left over after taxes, climbed 1.9%, mainly because of higher government benefits such as Medicaid tied to the introduction of the new health-care law.