The U.S. economy contracted in the first quarter of 2015, revised gross domestic product figures reveal.
The .7 percent contraction comes in the wake of an original estimate that claimed first-quarter GDP had expanded by .2 percent. But the May revision of first-quarter growth indicates an economy that, in a technical sense, is in recession.
From a statement released by the Department of Commerce:
Real gross domestic product — the value of the production of goods and services in the United States, adjusted for price changes — decreased at an annual rate of 0.7 percent in the first quarter of 2015, according to the “second” estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 2.2 percent.
The GDP estimate released today [Friday, May 29] is based on more complete source data than were available for the “advance” estimate issued last month. In the advance estimate, real GDP increased 0.2 percent. With the second estimate for the first quarter, imports increased more and private inventory investment increased less than previously estimated (for more information, see “Revisions” on page 3).
While Commerce cites an imports/export imbalance, the Obama administration also blamed bad winter weather and Americans’ increased propensity to hold onto their money. White House economist Jason Furman instead pointed to a “combination of personal consumption and fixed investment” as a better indicator of the state of the economy’s true health.
“The first-quarter slowdown was the result of harsh winter weather, tepid foreign demand, and consumers saving the windfall from lower oil prices,” Furman wrote. “The combination of personal consumption and fixed investment, the most stable components of GDP, has grown 3.4 percent over the past four quarters. This solid long-term economic trend complements the robust pace of job growth and unemployment reduction over the last year.”
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