U.S. Economy Stall In Q1: Weather To Blame?
The US economy just barely grew in the first quarter of this year, and many might say the rough winter is to blame. Exports plummeted and companies bought stocks at a snail’s pace.
In the last quarter of 2013, gross domestic product grew at 2.6%. This past quarter showed a slow down to .1%. The slow down wasn’t a surprise, as GDP was expected by economists to slow, but only to around 1.2%. However, things are already looking up as some strength seemed to be returning at the tail end of the quarter.
So could this stagnancy be because of the winter’s especially harsh and unusual weather? Some say it could, in fact, some economists say that the weather could account for up to 1.4% of the growth’s downfall.
Trade and inventory make up the biggest part of the hit as businesses only accumulated $87.4 billion worth of inventory in the first quarter, the smallest number since the second quarter of 2013. This was the result from manufacturers receiving fewer orders after the a huge stock up at the end of 2013. Another factor was a simple reduction in consumer traffic to local malls and stores to buy inventory. Inventory accounts for .57% of the slow down.
Trade suffered from freezing temps as goods piled up at ports, unable to arrive at their destinations. This accounts for .83% of the drop, together with inventory totaling the 1.4% fall. However, the government has yet to make any comment as to the weather and any relation the harsh winter may have had in the stall.
Now that the weather is warming up and people are getting out and about, perhaps the second quarter of 2014 can make up for the weak first quarter of the year and give the economy a boost.
Image via Wikimedia Commons