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Economic Watch: First Quarter GDP Falls 1%, Jobless Claims Hit 2007 Level

UPDATED -- The broadest measure of American economic health shows it throttled back in the first quarter of the year, according to the U.S. Commerce Department.

by Staff
May 29, 2014
Economic Watch: First Quarter GDP Falls 1%, Jobless Claims Hit 2007 Level

 

2 min to read


UPDATED -- The broadest measure of American economic health shows it throttled back in the first quarter of the year, according to the U.S. Commerce Department.

New figures show the gross domestic product contracted at an annual rate of 1%, its first decline since the first quarter of 2011 when it fell 1.3%. This gauge of the total output of goods and services was revised from an increasing annual rate of 0.1%. This latest report is the second of three estimates from the department.

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“A much weaker start to the year than previously reported, meaning the subsequent ‘rebound’ is even more lackluster in comparison,” said Lindsey Piegza, chief economist at the investment firm Sterne Agee.

She said the good news, if there is any in a negative GDP report, is the consumer was reaffirmed as the one bright spot in the economy at the start of the year, with personal consumption increasing at a rate of 3.1%, slightly higher than level reported last month. “The bad news, other sectors of the economy, particularly investment, were much weaker than originally reported in the advanced report.”

Throughout much of the first quarter, many businesses were reported decreased levels of activity due to harsh weather that hit much of the eastern half of the country, causing corporate profits to fall from levels a year earlier, along with consumers buying less and there being severe transportation problems.

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“The downturn in the percent change in real GDP primarily reflected a downturn in exports, a larger decrease in private inventory investment, and downturns in nonresidential fixed investment and in state and local government spending that were partly offset by an upturn in federal government spending,” the Commerce Department said.

Jobless Claims

First time claims for unemployment benefits have hit a level not seen since before the Great Recession.

It fell to a seasonally adjusted level of 300,000 for the week ending May 24, down 27,000 from the previous week, and only the second time since 2007 it was at or below the 300,000 mark. Also, the four-week average fell to 311,500, the lowest level since August 2007.

The news follows a report from early this month showing unemployment in the U.S. fell to its lowest level in April since September 2008, with 288,000 jobs being added, the most since January 2012.

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Update adds jobless claims.

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