Economy in U.S. Stalls on Slump in Business Spending, Exports

29-Apr (Bloomberg) — The economy in the U.S. barely grew in the first quarter, buffeted by slumps in business investment and exports after oil prices plunged and the dollar surged.

Gross domestic product, the volume of all goods and services produced, rose at a 0.2 percent annualized rate after advancing 2.2 percent the prior quarter, Commerce Department data showed Wednesday in Washington. The median forecast of 86 economists surveyed by Bloomberg called for a 1 percent gain. Consumer spending, the biggest part of the economy, rose 1.9 percent, a little better than projected.

While the restraints of harsh winter weather and delays at West Coast ports were temporary, the effects of the drop in fuel prices and stronger currency will probably prove longer-lasting. Federal Reserve officials wrapping up their meeting later in the day may signal they’re in no rush to begin raising interest rates.

…Corporate fixed investment decreased at a 2.5 percent annualized pace, the worst performance since the end of 2009. It grew at a 4.5 percent rate in the previous quarter.

Investment in nonresidential structures, including office buildings and factories, dropped 23.1 percent, the most in four years. It rose 5.9 percent in the prior quarter.

…Exports have fallen for four consecutive months as the dollar gained more than 20 percent since the end of June and overseas growth remains uneven.

[source]

PG View: Inventory building added 0.74% to GDP, so real final sales were -0.5%. That’s bad news, so the Fed may have to express some more overt dovishness this afternoon.

Fed will meet later today to discuss when to raise interest rates. If they had models that worked, they'd discuss #QE4. That comes later.

— Jim Rickards (@JamesGRickards) April 29, 2015