Advance Estimate of GDP for the First Quarter of 2015

Economic growth in the first quarter was restrained by factors including tepid foreign demand and harsh winter weather. At the same time, households saved most of their gains from low energy prices, Over the past four quarters, the most persistent and stable components of GDP — consumption and fixed investment — have grown 3.3 percent. This trend complements the strong pace of job growth and unemployment reduction over the last year. This report underscores that the U.S. economy is directly affected by the global economy, making clear the importance of advancing Trade Promotion Authority in Congress so the President can take further steps to open up markets abroad to increase U.S. exports and expand opportunities for the middle class. In addition, we could further solidify the positive trends in the domestic economy by expanding investments in infrastructure and ensuring the sequester does not return in the next fiscal year as outlined in the President’s FY2016 Budget.

FIVE KEY POINTS IN TODAY’S REPORT FROM THE BUREAU OF ECONOMIC ANALYSIS

1. Real gross domestic product (GDP) grew 0.2 percent at an annual rate in the first quarter of 2015, according to the advance estimate from the Bureau of Economic Analysis. The report, which was likely affected by notably harsh winter weather in the first quarter (see point 2), reflects a slowdown in personal consumption as well as declines in fixed investment and net exports — as U.S. exports continue to be restrained by the global growth slowdown (see point 4). Indeed, the decline in net exports subtracted more than a full percentage point from quarterly GDP growth. Another major contributor to the slowdown was declining investment in mining exploration, shafts, and wells — likely reflecting the response to the sharp decline in oil prices — that subtracted more than half a percentage point from quarterly growth. Four-quarter growth of real GDP rose to 3.0 percent as the 2014-Q1 decline dropped out of the four-quarter moving average.

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