Wed April 30, 2014
U.S. Economic Growth Slows In First Quarter
The Commerce Department reports that GDP growth in this country — that’s the value of all goods and services produced in the economy — slowed to an annual rate of 0.1 percent for the first quarter of this year.
Diane Swonk, chief economist with Mesirow Financial in Chicago, tells Here & Now that the tough winter weather continues to affect the numbers.
Despite the low GDP growth for the first quarter, Swonk and other economists predict that the U.S. economy is on the upswing. They predict stronger growth for the rest of the year, as the economy adds jobs and consumer spending rebounds.
JEREMY HOBSON, HOST:
It's HERE AND NOW. And a lot of people were surprised this morning to see the Commerce Department report that GDP growth in this country - that's the value of all the goods and services produced in the economy - growth was just 0.1 percent for the first quarter of this year.
Diane Swonk is chief economist with Mesirow Financial in Chicago. She says the tough winter weather continues to affect the numbers.
DIANE SWONK: We didn't spend anything going out to buy cars. We didn't spend any money at malls. But we somehow spent a lot of time hibernating in our homes, consuming a lot of energy, and apparently on our computers, signing up for the Affordable Care Act. That's what the numbers would have you believe. The other side of it is construction, of course, was hit. Manufacturing activity was hit. And exports were also hit harder than imports, which all could be part of the weather.
HOBSON: And as Diane just mentioned, there are a lot of people signing up for the Affordable Care Act. It turned into what she saw as one of the bright spots in the report.
SWONK: Consumer spending on things like big-ticket durables, like automobiles, furniture, appliances was very weak in the first quarter, less than 1 percent, which we expected. So was spending very, very weak on non-durables, clothing and things like that. Nobody went out to the malls when the weather was the worst. We all knew that. That didn't happen. But spending on services, health care services, was very, very strong.
And we know that the government made an assumption about what people were doing to sign up for the ACA and what that meant about health care consumption in the first quarter. It may or may not be an accurate assumption and it may be changed, you know, on revision. But that's a little bit of a red herring in the data.
HOBSON: Well, despite the low GDP growth for the first quarter, Diane Swonk and other economists are predicting that the U.S. economy will continue to swing up, to be on the upswing. They predict stronger growth for the rest of this year, as the economy adds jobs. And we're going to get that jobs report on Friday, and as consumer spending rebounds. Transcript provided by NPR, Copyright NPR.