The economy grew at a sluggish 0.5 percent annual rate in the first quarter. The main culprits for the poor performance were downturns in durable goods, nonresidential construction, and defense spending. This is the third year in a row in which growth has been poor in the first quarter, which means that one-off excuses about snowstorms and so forth don’t really hold water anymore. But it might be a statistical artifact. Jared Bernstein says “there’s some concern with the seasonal adjusters, which some argue are biasing Q1 down and Q2 up.” I guess we’ll have to wait until Q2 to find out.
Even if that’s true, however, growth is still fairly listless, averaging around 2 percent per year. It’s yet another indication that the global economy remains fragile and the Fed should think twice before raising rates any more than they’ve already done.
