America’s economy has cooled down this year.
The U.S. gross domestic product, the broadest measure of economic growth, only rose 0.2% in the first quarter, well below expectations that growth would be 1%.
It’s better than a year ago when the “Polar Vortex” turned the GDP negative, but it’s still not welcome news. The cold winter weather, the strong U.S. dollar and West Coast port strike contributed to the weak economic growth this year.
The silver lining is that 2015 could be a repeat of last year: Weak growth in the first few months followed by a robust comeback for the rest of the year.
Still, the meager first quarter economic growth concludes a string of bad news in the past few weeks.
American consumers make up the majority of economic activity, and it’s clear that they haven’t spent much in 2015. Retail sales — such as buying a car or getting groceries — rose a meager 0.9% in March and were negative in February. Construction on new homes, another key indicator of consumer spending, was down in March from a year ago.
And March’s jobs report was, by any measure, a major disappointment. The economy only added 126,000 jobs in March, driving concerns that hiring could be slowing down.
But perhaps the biggest impact of America’s weak first quarter GDP is the Federal Reserve’s much anticipated rate hike, which will affect millions of people and markets across the globe.
The Fed releases its statement Wednesday afternoon, but it’s not expected to raise rates in April. Although the Fed could raise rates in June, the lukewarm job and economic data has many experts calling for a rate change in September or later.
