Slow first quarter activity, along with dampened energy prices, helped usher in a weaker than expected first quarter for the U.S. economy.
The nation’s gross domestic product peaked at a 0.2 percent annual rate expansion, according to data released by the U.S. Department of Commerce earlier in the week. The rate is said to be the ‘weakest reading in a year,’ especially after last year’s fourth quarter turned out a 2.2 percent rate. The recent lag in recovery is now the slowest recovery pace on record, as the economy has yet to gain annual growth at a rate approaching 2.5 percent.
Consumer spending also slowed, dropping from a rate of 4.4 percent in the fourth quarter to just 1.9 percent in the first quarter of this year.
Due to the data, investors now expect the Federal Reserve to ‘wait until later this year’ to raise interest rates. The Federal Reserve, this past Wednesday, acknowledged the slower rate of growth, but marked such growth as ‘reflective of a clear transitory period [in the U.S. economy].’
In other news, the U.S. dollar hit a nine-week low this week, squaring off against nine other currencies. Bonds and stocks also traded lower in the week; bonds, in particular, were affected by another sell-off, while stocks traded lower in response to current economic conditions.
Economists, according to their market observations, expected the U.S. economy to start expanding at a rate of 1.0 percent. Despite the data indicating otherwise, many do hold a sentiment similar to the Federal Reserve’s recent comments: that the data is indicative of a transitory period.
As of now, many do expect the second quarter to pick up and for the rest of the year to look even better, despite the odds.