Categories: Mount Kisco

GDP Growth in the First Quarter – Stormy Weather? | Mt Kisco Real Estate

The Bureau of Economic Analysis (BEA) reported real GDP grew at a seasonally adjusted annual rate of 0.2% in the first quarter of 2015. Real GDP grew at an annual rate of 2.2% in the fourth quarter of 2014. The slowdown in economic growth was expected but the extent of the slowdown was a surprise. Harsh weather, a strong dollar, stalled trade at west coast ports and falling energy prices all played a role. In the same report the BEA reported that the price index tracking components of GDP, the broadest measure of price movements across the economy, declined by an annualized rate of 0.1% in the first quarter, after rising only 0.1% in the fourth quarter.

A strong dollar and stalled trade combined to shrink exports by an annual rate of 7.2% shaving almost a full percentage point from growth, but the stalled trade likely restrained imports given the rise in the value of the dollar, which would have depressed growth further. The trade dispute has been resolved, but the strong dollar is likely to persist and be a drag on growth in the near term.

Record low temperatures around the country in February can be considered a one-off event with little impact on growth going forward, but falling energy prices have put the brakes on a previously booming energy sector and contributed to an annualized 23.1% decline in the structures component of fixed investment. Investment in equipment, intellectual property and housing (residential fixed investment) all contributed to growth in total fixed investment, but less than in the previous quarter.

Inventory investment increased when it probably should have declined, adding nearly three quarters of a percentage point to growth in the current quarter, but will likely subtract from growth in the next quarter as payback. Personal consumption expenditures (PCE) slowed to 1.9% growth from an unsustainable 4.4% last quarter but will need to reaccelerate if the overall growth outlook is to improve.

 

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http://eyeonhousing.org/2015/04/gdp-growth-in-the-first-quarter-stormy-weather/

Robert Paul

Robert is a realtor in Bedford NY. He has been successfully working with buyers and sellers for years. His local area of expertise includes Bedford, Pound Ridge, Armonk, Lewisboro, Chappaqua and Katonah. When you have a local real estate question please call 914-325-5758.

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