GDP In Line With Estimates
The Commerce Department released the first quarter gross domestic product (GDP), which fell 0.2 percent for Q1, matching expectations, and an improvement over the 0.7 percent pace of contraction it reported last month.
Much of the weakness was attributed to bad weather, lower energy sector spending and disruptions at West Coast ports. Economists estimated that unusually heavy snowfalls in February sliced off at least one percentage point from growth.
The strong dollar also accounted for some of the softness in GDP. Exports were a substantial drag on GDP, with the strong dollar negative effecting foreign demand. A rise in imports was the biggest negative to Q1 GDP. Business spending has been hurt by a strong dollar and lower energy prices. Inventories contributed 0.45 percentage point to GDP, higher than the previously reported 0.33 percentage point.
Consumer spending, which comprises the majority of U.S. economic activity, was a bright spot, revised up to 2.1 percent growth pace from the 1.8 percent rate reported last month. Spending on services, that included strength for restaurants, was the strongest component in the first quarter.
Market reaction was muted following the release, with S&P 500 futures down slightly at 2112.50.
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