Photo: Revisorweb via Wikimedia Commons

Photo: Revisorweb via Wikimedia Commons

The pace of economic growth in the U.S. slowed dramatically in the first quarter of the year, according to the first estimate from the Commerce Department.

The gross domestic product increased at an annual rate of 0.2%, down from a rate of 2.2% in the fourth quarter of 2014 and 5% in the third quarter of last year -- far lower than many analysts were expecting.

A second first-quarter estimate, based on more complete data, is set for release on May 29. A third estimate comes out about a month later.

The increase in the GDP in the first quarter primarily reflected positive contributions from personal consumption expenditures and private inventory investment. These were partly offset by negative contributions from exports, nonresidential fixed investment, and state and local government spending, according to the department. Imports, which are a subtraction in the calculation of GDP, increased.

Cause for alarm?

American Trucking Associations Chief Economist Bob Costello said on his Twitter feed the anemic performance was no cause for panic, and he expects economic growth in the current through fourth quarters of the year will “snap back.”

This poor performance is being blamed on winter weather, as it was the same time a year earlier. It was also affected by labor problems at West Coast ports, a stronger dollar slowing U.S. exports, and even lower oil prices. Also, consumer spending fell from a 4.4% annual growth rate in the final quarter of last year to a 1.9% pace in the first quarter of this year -- again, potentially impacted by bad weather.

Business investment also declined in the first quarter, with corporate fixed investment declining at a 2.5% annual rate in the first quarter, the worst performance since 2009. That compares to a 4.5% annual growth rate in the final quarter of 2014. Investment in nonresidential structures posted a 23.1% drop in the fourth quarter of 2014, the biggest drop in four years, after rising 5.9% in the fourth quarter of last year.

One analyst isn't buying the "bad weather" excuse.

“Holy weak growth, Batman!” said Chief Economist Lindsey Piegza with the investment banking firm Sterne Agee. “After back-to-back quarters of above trend growth in the second and third quarters of last year, activity has slowed in nearly every category…Some analysts have been quick to dismiss the weakness as transitory, resulting from one-off factors such as cold winter weather or port disruptions. However, the widespread malaise across nearly every sector of the economy, not to mention the continued weakness in March and April data after the temporary issues were resolved, suggests fundamental weakness as opposed to Mother Nature is at the root cause of the economic decline.”

She said given the widespread slowdown in activity at the start of the year, she expects the Federal Reserve to at least partially acknowledge the recent weakness in the data, particularly in the labor market and prices, while maintaining a modest view of overall economic activity levels.