Tags: consumer | spending | GDP | growth

WSJ: Sluggish Consumer Spending Seen Keeping Q1 GDP Growth Below 2 Percent

By    |   Monday, 31 March 2014 08:32 AM

Tepid gains in consumer spending have helped send some economists' first-quarter GDP growth forecasts below 2 percent, The Wall Street Journal reports.

The economy expanded 2.6 percent in the fourth quarter.

Consumer spending rose 0.3 percent in February, the government announced, but January's increase was revised down to 0.2 percent from 0.4 percent.

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Research firm Macroeconomic Advisers now predicts the economy will grow 1.3 percent in the first quarter, down from its prior forecast of 1.5 percent, according to The Journal. JPMorgan Chase cut its first-quarter projection to 1.5 percent from 2 percent.

Barclays Capital trimmed its prediction to 2 percent from 2.4 percent, and research firm MFR cut its forecast to 1.2 percent from 1.8 percent, The Journal reports.

Consumer spending accounts for about 70 percent of GDP. The nasty winter weather in much of the country may have kept numerous consumers at home during the first three months of the year.

But some economists expect GDP to rebound soon. "The economy is distancing itself from that period of weather-induced slowdown," Millan Mulraine, an economist at TD Securities, tells The Journal. "If that continues, we should see a meaningful pickup in growth momentum in the coming months."

Guy Berger, an economist at RBS Securities, also voices optimism. "That additional boost in employment that we're probably going to see in March, and maybe one or two of the other spring months, is probably going to boost income growth," he tells Bloomberg.

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Tepid gains in consumer spending have helped send some economists' first-quarter GDP growth forecasts below 2 percent, The Wall Street Journal reports.
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2014-32-31
Monday, 31 March 2014 08:32 AM
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