U.S. Economy May Find It Hard to Spring Back From Weak Winter

This time, you can’t blame it on the weather.

For the third year in a row, the U.S. economy started the year with a dose of the blues as gross domestic product eked out a 0.5 percent annual gain, according to Commerce Department figures released Thursday.

Yet unlike in 2014 and 2015, the blahs can’t be attributed to harsh weather. Indeed, a milder-than-normal winter may have helped, rather than hurt GDP, as builders were able to do more work outdoors than otherwise, according to Ted Wieseman, an economist with Morgan Stanley in New York.

That’s one reason why the economy may have difficulty springing back anything like it did in 2014 and 2015. Wieseman’s tracking estimate for growth this quarter is 1.4 percent after the economy turned in its worst performance in two years. That’s a far cry from a second-quarter surge of 4.6 percent in 2014 and 3.9 percent in 2015 as construction and other spending snapped back after being depressed by the weather earlier in those years.

Another reason for caution: a slowdown at the core of the economy. After stripping out unsold goods and trade, the two most volatile components of GDP, as well as government expenditures, so-called final sales to private domestic purchasers increased at a 1.2 percent rate, the weakest advance since the third quarter of 2012.

Core Sales

That’s a statistic closely monitored by economists at the White House and the Federal Reserve to gauge the underlying health of the economy. Central bank policy makers projected in March that the economy will be solid enough to allow them to raise interest rates twice this year.

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http://www.bloomberg.com/news/articles/2016-04-28/u-s-economy-may-find-it-hard-to-spring-back-from-weak-winter