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US economy shrank 1.0% in first-quarter, bad weather blamed

US economy shrank 1.0% in first-quarter, bad weather blamed
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The full extent of the US economy’s winter blues has been revealed.

It seems gross domestic product shrank 1.0 percent between January and March from the same period last year due to the effects of severe weather.

Reaction was muted as there are signs that economic activity has since rebounded.

It had been expected the revised figures would show the performance of the world’s largest economy to have been worse than the 0.1 percent growth estimated previously, but the 1.0 percent fall was twice as bad as had been predicted.

Economists have calculated the bad weather early in the year could have reduced growth by as much as 1.5 percent.

However, the US Commerce Department, which compiled the figures, gave no details on the impact of the grim winter.

The revised weaker numbers are not seen changing the US Federal Reserve’s stimulus reduction plans.

There was no big reaction from US financial markets given the temporary factors involved and that economic activity is rebounding.

At the same time as the GDP figures were released there were fresh signs of strength in the US jobs market.

First-time applications for state unemployment benefits declined 27,000 to a seasonally adjusted 300,000 last week.

The four-week moving average for new claims, considered a better measure of underlying labor market conditions as it irons out week-to-week volatility, hit its lowest level since August 2007.

with Reuters