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THE US economy inched forward at the weakest pace in two years from January through March, as consumer spending growth slowed, business investment plunged and exports declined further.
The gross domestic product, the broadest measure of economic health, grew by a tiny 0.5 percent in the first quarter, the Commerce Department said yesterday. That is down from 1.4 percent growth in the fourth quarter.
The January-March performance was the poorest showing since GDP shrank by 0.9 percent in the first three months of 2014.
Ian Shepherdson, chief economist at Pantheon Macroeonomics, said the GDP report “looks grim, but the second quarter will be much better.”
Since this recovery began almost seven years ago, GDP has been weak in the first quarter each year only to rebound in the spring. Economists are looking for a similar pattern this year, seeing second-quarter growth of around 2 percent.
The year got off to a rocky start, with economic growth in China slowing. A steep plunge in oil prices have also triggered more cutbacks in the US energy sector.
The headwinds led economists to slash their forecasts for first-quarter growth, and the Federal Reserve slowed its pace for raising interest rates.
For the first quarter, consumer spending, which accounts for 70 percent of economic activity, grew at a 1.9 percent rate. That’s down from 2.4 percent in the fourth quarter and the weakest showing in a year.
Business investment fell 5.9 percent, the biggest quarterly plunge since the depths of the recession in 2009. The decline was led by a record 86 percent plunge in the category that covers oil and gas exploration. US energy companies have cut back sharply in response to falling global oil prices.
Adding to the weakness, the rise in the value of the dollar over the past year hurt exports and drove up the trade deficit. The higher deficit subtracted 0.3 percentage points from growth in the first quarter. A further slowdown in business spending to restock their store shelves also trimmed 0.3 percentage points from growth in the first quarter.
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