In the first quarter of 2015 (January, February and March), the economy exhibited weakness that has become all too common during the Obama era. The Bureau of Economic Analysis reports that the economy grew at just 0.2 percent during that time.
At 0.2 percent growth, the economy was dangerously close to not growing at all, or even contracting. This is a first estimate from the Bureau of Economic Analysis and subsequent estimates could show the economy grew stronger, or, troublingly, was actually shrinking.
Consumption in the first quarter was relatively strong compared to other sectors of the economy, but fell compared to the previous quarter. Declines in business investment and exports were large factors contributing to the anemic GDP growth.
Government spending also fell. Inventories ticked up, which could mean businesses portend stronger sales going forward, but could also be a sign of declining demand.
This overall slowdown is disappointing because growth was strong in the middle of 2014, leading many to suspect the economy was finally having a period of breakout growth that has been conspicuously absent from the recovery from the 2009 Great Recession. In the second and third quarters of last year, the economy grew 4.6 percent and 5.0 percent respectively.
However, the economy slowed down in the fourth quarter to 2.2 percent. Combined with today’s subpar report, it looks like hopes that the economy will break free of the shackles President Obama’s policies have put on it through higher taxes, more regulation and chronic uncertainty have been dashed once again for the time being.
Many analysts will likely point to bad weather during the prior three months as a cause for slow growth, and as evidence that the economy is stronger than this report indicates. Weather could certainly be a contributing factor and the economy could grow stronger the rest of the year. The economy bounced back strongly from a first quarter of negative growth last year to have that strong growth in the middle of the year.
But the fact remains that a period of consistently strong growth, where the economy grows for several consecutive quarters at rates above 5 percent at least, remains elusive in this frustratingly weak recovery.
In the recovery from the 1981-82 recession, by way of comparison, the economy had three successive quarters where growth exceeded 8 percent.
The American people are becoming accustomed to a maddeningly inconsistent economy, but it does not have to be this way. If we had a true recovery, growth would not be so low today and wages would be higher and job opportunities greater. Unfortunately, they will not experience those improvements until Washington reverses its poor policy decisions of recent years.