First drop in U.S. economic growth in three years

[mahatmakanejeeves]

Source: Fortune

By Christopher Matthews May 29, 2014: 9:19 AM ET

The Commerce Department says GDP growth fell in the first quarter by 1%, the first quarterly decline since 2011. But there's still plenty of evidence of a strengthening economy.

FORTUNE -- The Commerce Department revised its estimate for real GDP growth in the first quarter of 2014, saying that it fell by 1%, revising downward its previous estimate that real GDP declined by 0.1% last quarter.

Economists had blamed much of the decline in GDP on the effects of unusually severe winter weather in much of the country, which can cause consumers and businesses to delay purchases they otherwise would have made. But the data in today's report show that consumer spending was actually strong in the first quarter of the year, increasing by 3.1%. What really dragged down growth was shrinking business inventory and a lack of investment on the part of private firms -- with both categories shrinking by roughly 1.6%. Exports also fell by 6% after increasing by 9.5% in the fourth quarter of last year.

The release sparks fresh debate over the state of the U.S. economy. Bears are pointing to the lack of business investment and what appears to be the slowing of the U.S. housing recovery as reasons to doubt the common wisdom that the economy is slowly, but surely, getting back to full strength. Some on Wall Street are even labeling this the beginning of another recession:
....

But many others caution that quarterly economic data can be very volatile and there's still plenty of evidence of a strengthening economy. Jim O'Sullivan, chief U.S. economist at High Frequency Economics has been cautioning market participants to not draw too much from quarterly GDP data, writing in a note to clients this week that jobs numbers, particularly the weekly unemployment claims data, has consistently shown signs of an improving economy.

Read more: http://finance.fortune.cnn.com/2014/05/29/gdp-drop-revision/

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Information on this week's initial unemployment claims is here:

ETA News Release: Unemployment Insurance Weekly Claims Report (05/29/2014)

[onehandle]

1. It's time to deport the recovery blockers in Congress and return to 1940s tax rates.

Business doesn't want to be patriots and invest in their country?

Take their money.

[BumRushDaShow]

2. "lack of business investment"

while they hoard trillions in cash instead of upgrading or expanding. They swear by the latest full proof business model FAIL of reducing costs by laying off staff and taking write-offs to meet 20% or more of profits because "that's what their stockholders expect" (while applauding the ginormous CIO pay packages).

[BeyondGeography]

3. Still could be weather-related

The economy isn't roaring to begin with and huge chunks of the country were frozen in 1Q, including many weekends when people go out to spend a few bucks. Businesses may well have factored a potential slowdown into their thinking on investments.

Still, what can the R's say? They are stuck with more handouts to the rich as their primary response to any bad economic news.

[Swede Atlanta]

4. I tend to believe this was triggered at least in part by the weather....

I have been amazed at how well the economy has done in the face of Congressional opposition to any measures to promote economic investment and development and job growth.

The stimulus kept us from going further off the cliff but we have struggled to keep the economy going. I think the Fed's actions are the only thing that have prevented Armageddon and actually driven economic growth.

I only wish we had a Congress that would agree to invest in America in terms of jobs, infrastructure, education, re-training, renewable energy, etc.

[Kelvin Mace]

6. "Strengthening economy"?

For who?

Also:

"Economists had blamed much of the decline in GDP on the effects of unusually severe winter weather in much of the country,"

You mean the "unusually severe" weather that is now the norm?

[taught_me_patience]

7. Completely weather related

I bet the economy grows 3.5-4% in Q2, as pent up demand is realized.

[former9thward]

8. Those rates of growth are long gone.

Besides they factor in weather when determining GNP and employment. The government is aware it snows in the winter.

[imthevicar]

9. watch the shit go down hill.

Cause you can't keep feeding bankers for too long!