GDP Grows 2.5%

Actual growth of the U.S. economy was .7% lower than projections by economists; expansion was reported at a 2.5% rate between January and March. This change reflects the decline in investments by businesses after a strong finish to last year; companies have cut overall spending on new buildings for the first time in two years and lowered inventory levels. “It is likely that the contraction in federal; defense and nondefense spending, reflects the onset of sequestration” said Alan B. Krueger, chairman of the White House’s Council of Economic Advisers. Consumer spending is the primary factor in growth but the increase in payroll taxes has resulted in most expenditures being focused on necessary commodities.  

The economy has grown for 15 consecutive quarters at an average of 2% annually; this is considered weak by historical standards. The 2.5% rate of expansion in the first quarter is raising concerns of slow growth this year.

Evan Chan g

Source: The Wall Street Journal

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