Consumers Help GDP Contract Less than Last Estimated
The economy of the United States, the largest in the world, shrank in the first quarter of 2015, but not as much as previously estimated because of a large boost in consumer spending. This according to an article in Transport Topics, a trucking industry news site.
The Gross Domestic Product fell at a 0.2 percent annual rate, revised from the previously reported 0.7 percent drop, according to data presented by the Commerce Department on June 24 in Washington.
The harsh winter weather and port delays stymied growth toward the beginning of the year, but now consumer spending has rebounded, boosting Federal Reserve projections and supporting their belief that the setback was temporary. Still, there have been “pockets of weakness”
“What we are seeing here does validate the story that the first-quarter weakness was transitory,” said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York, who correctly forecast GDP. “The consumer is coming back to overall decent growth.”
Economists have estimated a decline of 0.5 percent, to an increase of 0.4 percent, and the economy grew at a rate of 2.2 percent from October through December.
“Part of this weakness was likely the result of transitory factors,” Fed Chairperson Janet Yellen said at a press conference after policymakers met to discuss the monetary policy outlook. “Despite the soft first quarter, the fundamentals underlying household spending appear favorable, and consumer sentiment remains solid.”
The first estimate of the second-quarter GDP is set to be released on July 30. The economy is set to expand at a rate of 2.5 percent from April through June, and average 3 percent growth in the last half of the year, according to Bloomberg, who set a median projection of a group of economists from June 5 through June 10.
The details of that report revealed that household consumption great at a rate of 2.1 last quarter, which was revised from an initial estimate of 1.8 percent, reflecting larger outlays on food and transportation. The median forecast for projected consumer spending according to the Bloomberg survey would be revised to 1.9 percent after a gain of 4.4 percent in the fourth quarter.
With spending continuing to rise as the market improves, the saving rate has also risen, because earnings increased more than spending. The rate rose to 5.4 percent, up from 4.7 percent to close out 2014.
Data also indicates that household purchases have risen this quarter as well. Retail sales have risen 1.2 percent. This improvement was thought to be a reflection of the gains everywhere from car dealers to clothing outlets and department stores, according to Commerce Department figures. This followed a gain of 0.2 percent in April.
While GDP is a complex economic statistic, it may be seen as an indicator of the health of the trucking industry. For more information on this story and what it means for the trucking industry, read the original story.
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