The US economy came to a near standstill in the first quarter of 2014, growing at one of its weakest paces since 2012. The slow growth could indicate that America's post-recession honeymoon is over.
Gross Domestic Product (GDP), or the total sum of all goods and
services produced within the USA, only advanced 0.1 percent in
the first three-month period of 2014, the Commerce Department
said on Wednesday.
The report is a preliminary estimate and can be revised significantly, either up or down.
Economic momentum slowed down due to the effects of extreme winter weather, as well as a decrease in business spending. Exports fell at a rate of 7.6 percent in the first quarter – the biggest fall since the recession ended. The frigid weather could be to blame for less consumer spending, which only increased at a rate of 0.4 percent.
The slowdown is in stark contrast to the 3.4 percent economic expansion that the US enjoyed in the second half of 2013.
“We’ve been living in sub-3 percent land, and people have gotten used to that as the new normal. But it's not. It's anemic,” Dan North, chief economist at Euler Hermes North America, told The New York Times.
America's economy slowed drastically in the first quarter of 2014, as wintry weather depressed corporate spending and housing sector activity. Smaller additions to inventories by farmers and businesses also held back growth.
Business spending dropped 2.1 percent between January and March, as companies spent less on buildings, equipment, and intellectual property.
Federal spending is set to grow in 2014, which could help offset the lackluster first quarter growth. Most economists are predicting an overall growth of between 2.5 and three percent.
Later on Wednesday, the Federal Reserve will finish its two-day meeting and will likely announce another $10 billion in monthly bond purchases as part of its planned 'tapering’ of stimulus spending.