Comment on Q1 GDP by Bart van Ark, Executive Vice President and Chief Economist, The Conference Board

Q1 GDP: INCLEMENT WEATHER SHARPLY WEAKENED GROWTH BUT OUTLOOK REMAINS POSITIVE

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Apr 30, 2014, 09:20 ET

NEW YORK, April 30, 2014 /PRNewswire/ -- The U.S. Bureau of Economic Analysis today reported 0.1 percent annualized growth in real Gross Domestic Product for the first quarter of 2014.

Economic growth in the first quarter was disappointing, beyond the anticipated slowdown related to the brutal winter weather conditions affecting major parts of the nation. Based on these preliminary estimates, inclement weather had an even more negative impact than analysts had calculated. Despite positive growth effects from continued consumer spending, these were offset by a strong decline in investments in residential and non-residential structures, and a sharp decline in exports. However, there is little reason to expect a continued sub-par performance. The strength in consumer spending in the first quarter is expected to continue into the second quarter. In going forward, we receive similar positive signals from The Conference Board Leading Economic Index. If the economy can deliver as much as 3 percent growth in the second quarter, and open more than 200,000 new jobs per month, it will help set the stage for a strong third-quarter performance. In short, after a very disappointing first quarter, the economy, freed from headwinds such as a weak housing market or budget squabbles, and buoyed by catch up, low inflation and low interest rates, could finally realize its potential underlying dynamism. That's a more positive outlook than any time during the past five-year post-recession period since 2009.

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