By Barry Cox W ell the United States GDP figures are in and for the third straight year the economy is off to a slow start with the smallest increase in growth for the first quarter in two years. This is now surprise given that American consumers reined in spending and companies tightened their belts in response to weak global finan- cial conditions and plunges in oil prices. United States Gross domestic product rose at a weak 0.5 percent annu- alized rate after a 1.4 percent fourth-quarter of 2015 and marked the third straight disappointing start to a year. With unstable global markets and commodity markets stumbling have resulted in the biggest business-investment slump in almost seven years, and household purchases climbed the least since early 2015. It was not all bad news as data indicated strong hiring and income gains that have the potential to reignite consumer spending and propel economic growth. Americans have more job security which account for Household purchases, which account for almost 70 percent of the economy, rose 1.9 percent. The biggest factor weighing on the economy last quarter came from companies. Nonresidential fixed investment, or spending on equip- ment, structures and intellectual property, dropped at a 5.9 percent annualized pace, the biggest decline since the second quarter of 2009. Last year’s slump in oil prices that extended into early 2016 led to an 86 percent annualized plunge in capital spending on wells and shafts in the oil industry, the most in records back to 1958.
of 2016. In 2015, the U.S. economy had shrunk almost 1 percent and then had a second quarter growth of almost 5 percent.
The Federal Reserve interest rate will remain unchanged as the economic forecast remains positive and the GDP price index was in line with projections as we look to the second quarter.
Investment is also weak as corporations struggle to boost profits against a backdrop of weak overseas demand and restrained domestic purchases.
If we are looking at the last two years of what to expect, the economy will recover from weak first quarter and rebound in the second quarter
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MAY 2016 • SPOTLIGHT ON BUSINESS
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