GDP Drops Nearly 1% in First Quarter

Blog Post - GDP Drops Nearly 1% in First Quarter

GDP numbers dropped nearly 1% since the last quarter in 2015 showing a slowing economy largely driven by low oil prices and a decrease in global demand.

It was bad across the board with the rare exceptions of real estate--which has lowered it's lending standards yet again--and state and local government spending. No surprise there, huh? Businesses have cut investments in capital, even with very low nominal and real interest rates.

The good news is that wages are on the rise and cheaper gasoline prices have allowed many to keep more of their hard earned cash, but so far, that hasn't translated into increased consumption considering most have actually cut back since the middle of last year.

One explanation can be an increase in the core PCE price index (inflation rate without the volatility of oil and food prices) that rose from 1.3% to 2.1% in the previous quarter, perhaps partly due to rising healthcare costs attributed to Obamacare, which has been highlighted here in previous posts.

As seen below, first quarters tend to be a bit lower and rebound in later quarters. I'll be keeping my fingers crossed for an improved economy later in the year, but I definitely won't be holding my breath.

Will Ricciardella

SOURCES:

http://www.investors.com/…/gdp-growth-slumps-to-0-5-in-q1-…/

https://www.washingtonpost.com/…/u-s-to-release-data-showi…/

http://dailysignal.com/…/heres-why-insurance-premiums-are-…/

http://www.wsj.com/articles/SB112234272837695744

Comment list

    Post has no comments.

Leave a Reply

Your email address will not be published. Required fields are marked *

Captcha Image

Blog Search

Newsletter

Subscribe to our newsletter