E&P investment plunge of 48.6% annual rate is steepest since 2009
The government’s revised estimate for first quarter growth was revised down to -0.7% growth from 0.2% growth. The U.S. economy shrank in the first three months of the year due to severe winter weather and a widening trade deficit, reports the Associated Press.
Harsh winter weather kept consumers home and closed business, reports the AP, while labor disputes slowed trade at West Coast ports. Imports to the U.S. outweighed exports, further dragging down the economy. Housing construction and business investment in equipment were both revised up.
Cuts in energy exploration and production hit the economy hard. The government said E&P investment plunged at an annual rate of 48.6%, the steepest drop since 2009, during the Great Recession.
Growth expected through the rest of the year
Though falling GDP can be a sign of recession, economist see little cause for such concern this year. Steady job gains are expected to fuel modestly healthy growth for the rest of 2015. Analysts generally foresee the economy, as measured by the gross domestic product, growing at an annual rate of 2% to 2.5% in the second quarter, with further strengthening later in the year.
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