The WSJ reports,"the U.S. economy contracted in the first quarter of 2014, the latest stumble for a recovery that has struggled to find its footing since the recession ended almost five years ago.
Gross domestic product, the broadest measure of goods and services produced across the economy, contracted at a seasonally adjusted annual rate of 1.0% in the first three months of the year, the Commerce Department said Thursday. It was the first time economic output contracted since the first quarter of 2011, when it declined at a 1.3% pace.
Government economists had previously estimated GDP slowed to a 0.1% growth rate in the first quarter as harsh winter weather disrupted work sites, curtailed foot traffic at retail stores and snarled transportation networks across much of the U.S. The newly revised estimate incorporates additional economic data released in recent weeks. Higher-than-expected imports and slower-than-expected inventory growth dragged the economy into negative territory.
Economists surveyed by The Wall Street Journal had predicted Thursday's report would revise GDP growth down to a 0.6% decline.
U.S.-based corporations, meanwhile, posted slightly lower profits during the first quarter. The Commerce Department said corporate profits after tax, without inventory valuation and capital consumption adjustments, totaled a seasonally adjusted annual rate of $1.880 trillion for the quarter. That is down from profits of $1.905 trillion in the fourth quarter of 2013.
The three-month contraction isn't expected to herald a prolonged downturn or new recession. Most economists predict the U.S. economy will bounce back in the second quarter, though it isn't clear how strong of a rebound is in the works. Gauges of industrial production, retail sales and durable-goods orders all rose in February and March before weakening in April.
Even if it is temporary, the first-quarter downturn reflects a pattern seen repeatedly over the past five years. The worst recession since the Great Depression ended in June 2009, but the economic recovery has struggled to gain traction. Job growth has been largely lackluster even as the unemployment rate has slowly fallen. Sluggish wage growth has restrained consumer spending. The housing market surged in 2012 and into 2013, but has slowed over the last year.
Many economists had hoped 2014 would be a breakout year for growth, encouraged by an economy that grew at a 3.4% pace in the second half of 2013. Those hopes have been deferred—if not yet dashed—by the recent weak stretch".
