That weak first quarter (GDP) reading (of an annualized -1.0 percent) has caused many economists to lower their expectations for 2014 as a whole. The NABE (National Association of Business Economists) survey found that economists now project growth will be just 2.5 percent this year, down from a forecast of 2.8 percent in March.
The new forecast is still slightly above the annual average growth rate of about 2.2 percent since the recession ended in June 2009 and up from 1.9 percent in 2013. But stronger growth is needed to accelerate hiring and boost wage growth, which has been weak by historical standards.
B-b-b-b … But I thought the first quarter contraction meant that even more growth would be pushed into the second quarter and the rest of the year. What happened?
Answer: Fundamental Obamanomics — not the weather.
The press is still ignoring the GDP-related impact of March’s deeper than originally reported trade imbalance and steep revision to first-quarter productivity. If those have the impact one would expect, the first-quarter contraction reported later this month will be deeper, meaning that it will take longer for whatever growth occurs during the rest of the year to offset it.