It will be May 29 before the U.S. Department of Commerce updates its estimate of how the Nation’s Gross Domestic Product (GDP) performed during the first fiscal quarter of 2014, but it’s looking more and more likely that the worth of what the U.S. is producing has declined for the first time since the middle of 2009.
The Wall Street Journal reported today that fresh data from the Commerce Department on retail sales and business inventories, the latter of which grew slugglishly in March. That information, combined with an earlier Commerce GDP report of anemic 1st-quarter growth, set off a series of negative estimates from five major fund management firms, all of which anticipate an imminent announcement that the economy has, in fact, contracted.
“A couple weeks ago, the Commerce Department said U.S. economic output expanded at a seasonally adjusted annual rate of 0.1% in the first three months of the year. A near-stall for the economy, for sure, but at least it wasn’t worse,” WSJ observed, before offering this:
Based on more up-to-date figures, including the March trade data released last week, private forecasters now expect gross domestic product contracted in the first quarter for the first time in three years.
The latest evidence came Tuesday, when the Commerce Department released reports on retail sales and business inventories. Retail sales in February and March were revised up, but business inventories grew less in March than the agency had assumed in its GDP calculations.
Incorporating the new data, J.P. Morgan Chase on Tuesday estimated GDP contracted at a 0.8% rate in the first quarter. Macroeconomic Advisers put the contraction at 0.7%. Barclays Capital predicted a 0.6% decline. Pierpont Securities estimated output fell at a 0.4% rate. Action Economics estimated a 0.2% decline.
Any of those estimates, if correct, will mark the first time the U.S. economy has contracted since President Obama’s first year in office.
The GDP shrank by 2.8 percent in 2009, and has “recovered” marginally since, with annual growth margins of 2.5 percent (2010), 1.8 percent (2011), 2.8 percent (2012) and 1.9 percent (2013). Under President Clinton in the 1990s, the GDP routinely saw annual gains in excess of four percent, followed by a roller coaster ride for eight years under President Bush, whose best year came in 2004, when the GDP grew by 3.8 percent.