US economic growth weakened to 0.7 percent in first quarter of 2017

Fox News ^ | 04/28/2017 | By MARTIN CRUTSINGER

[SeekAndFind]

WASHINGTON – The U.S. economy turned in the weakest performance in three years in the January-March quarter as consumers sharply slowed their spending. The result underscores the challenge facing President Donald Trump in achieving his ambitious economic growth targets.

The gross domestic product, the total output of goods and services, grew by just 0.7 percent in the first quarter following a gain of 2.1 percent in the fourth quarter, the Commerce Department reported Friday.

The slowdown primarily reflected slower consumer spending, which grew by just 0.3 percent after a 3.5 percent gain in the fourth quarter. It was the poorest showing in more than seven years.

Economists attributed the sharp slowdown in consumer spending to shrinking utility bills due to warmer weather, a drop-off in auto sales and a delay in sending out tax refund checks by the IRS, which also dampened spending.

Sal Guatieri, senior economist at BMO Capital Markets, said he expected consumer and government spending to bounce back, leading to a much stronger second quarter.

"Still, the report will mark a rough start to the administration's high hopes of achieving 3 percent or better growth, not the kind of news it was looking for to cap its first 100 days in office," Guatieri said in a note to clients.

Averaging the two quarters, they forecast growth of around 2 percent for the first half of this year. That would be in line with the mediocre performance of the eight-year economic expansion, when growth has averaged just 2.1 percent, the poorest showing for any recovery in the post-World War II period.

[ilovesarah2012]

https://www.redfin.com/blog/2017/04/march-2017-real-time-housing-market-tracker.html

Home Sales and Prices Pick Up Steam as Supply Shortage Continues into Spring

March market speed continues the trend of 2017 being the fastest housing market on record

[JohnBrowdie]

Buried 12 paragraphs down:

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On the positive side, business investment rose at a 9.4 percent rate, helped by a record surge in spending in the category that tracks spending in the energy sector. This category had seen sharp cutbacks in recent quarters, reflecting reductions in exploration and drilling as energy prices declined.

In recent years, the first quarter has often turned out to be the weakest for the year, reflecting in part problems the government has not been able to resolve in adjusting its figures for normal seasonal changes.

[silverleaf]

Same here!
Shocking actually how little it really pays to work

[nikos1121]

Am I stupid here, but if we have .7% growth each quarter we’re on a 2.8% pace for the year?

[nikos1121]

It was 1.1% first quarter of 2016. Many times these numbers end being revised up or down.

[DungeonMaster]

America is a really big ship and the presidency is a small rudder. With Trump we trust the rudder is trying to move the ship in the right direction. Obama was trying to drive the ship into the rocks.

[Calif Conservative]

Fake stats? Just because you don’t agree? POTUS Trump isn’t to blame for this. Nevertheless it’s a troubling number that needs significant improvement to avoid going negative.

[Calif Conservative]

Consumer spending is approx 70 percent of the figure - the rest is primarily business spending. So consumers might be more confident, but doesn’t mean they are spending.

[sheana]

We’re both retired but all our income is taxed and we have no write offs. We paid off our house and now we send the money to the Feds instead of the mortgage company. Sucks.

[Calif Conservative]

You are exactly right Jarhead. It is as useless to believe every single thing that’s in the news — as it is to say you disbelieve every single thing in the news -

Trump is off to an excellent start — but the other day a poster here said “Trump is the greatest president we have ever had.” Ridiculous assertion.

Hero worship doesn’t help. Neither does becoming the boy who cried “Fake News”

[Calif Conservative]

Money spent on utility bills — as well as on fuel such as gasoline is a component of consumer spending. You may disagree whether spending more on utility bills means more consumer spending in that category - but it’s been that way since they started reporting GDP — and before that, GNP — so it’s an apples to apples comparison

[Calif Conservative]

If President Trump and the Republicans can avoid a recession and job growth continues and the unmeployment rate remains at the very healthy current levels, and wages rise (which they have been rising so far in 2017) he will be reelected and the majorities in both houses will be preserved)

[silverleaf]

Well then jack up my utility bills and call me a happy economically exuberant consumer

In my household the lower the utility bills, the more real income we have to spend

[silverleaf]

Realistically it might make sense to refi the house and spend some of that equity on having fun - and taking the deduction

Worth a comparison of net cost/ net gain !

[Calif Conservative]

As noted, it’s a counter-intuitive way — maybe even an asinine way — to measure it, but it is a component of consumer spending.

And if you spend more money on gasoline, that’s also an increase in consumer spending. That one actually makes a teeny bit more sense, because the money is being spent at a gasoline station — which is a retailer.

But the story also noted that the first quarter has in recent decades been tough for the Feds to calculate because there are big seasonal swings in inventories after the Christmas shopping season that are difficult to tote up.

[Calif Conservative]

Here’s an email take I received from Brian Wesbury

I know Brian personally — he’s a good guy, pro growth, pro U.S. , pro conservative and free market economics, a Trump supporter - he believes in supply side, low-tax economics and supported Trump

http://www.ftportfolios.com/retail/blogs/economics/index.aspx

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Implications: Although real GDP expanded at only a 0.7% annual rate in the first quarter, the soft headline was dragged down by slower inventory accumulation, which we expect to pick back up in the quarters ahead. To check the underlying trend in real GDP growth, we like to take out inventories, international trade, and government spending, none of which can be relied on for long-term growth. What’s left are consumer spending, business investment, and home building, what we also call “core GDP.” That grew at a 2.2% annual rate in Q1, is up 2.8% from a year ago, and is up at a 2.6% annual rate in the past two years. Business fixed investment soared in the first quarter, growing at a 9.4% annual rate, the fastest pace since 2013. Business investment slowed after oil prices collapsed but is now turning as those prices recover and fiscal policies improve. Meanwhile, home building grew at a 13.7% annual rate, the fastest pace since 2015. We expect gains in housing to continue as builders are still not constructing enough homes to keep up with population growth and scrappage. Consumer spending grew at only a 0.3% annual rate in Q1, but was held down by auto sales, which are often volatile, and low utility use (due to relatively warm winter weather in January and February). This report suggests that the Federal Reserve should remain on course to raise rates in June. Nominal GDP (real GDP growth plus inflation) grew at a 3.0% annual rate in Q1, is up 4.0% from a year ago, and is up at a 3.4% annual rate in the past two years. All of these figures suggest the Fed can raise rates without hurting the economy. In other recent news, pending home sales, which are contracts on existing homes, slipped 0.8% in March after a 5.5% surge in February. These figures suggest a modest increase in existing home sales in April, to a new high for the recovery.

[sheana]

I want to move. Hubby likes the idea of having a paid off house. He doesn’t want to refi or move. We don’t need the money so he doesn’t see the logic of a refi. Like banging my head up against the wall. Lol

[rlmorel]

"...Media and Dems will pounce on the “failure” to show immediate results..."

True.

Like the story of The Scorpion and The Frog, it is simply what they do. It is in their nature.

[Robert357]

This is just really strange.

First I don't believe it was really that low.

If it was that low, then why did the FED raise interest rates? Is the Fed so out of touch with the economy they would retard the growth of the economy when it was up, just a little bit.

[socialism_stinX]

Quarterly growth numbers released by the government are annualized rates. They take the percent change for the quarter and annualize it by either multiplying by four or taking it to the fourth power, e.g., 1.0028 to the fourth power.