GDP slows sharply in first quarter; jobless claims rise
The first report was widely expected. The Commerce Department said the nation’s output of goods and services expanded at an annual rate of 1.8% in the first three months of the year. That was down from 3.1% growth in the fourth quarter and 2.8% for all of last year.
The slowdown reflected the sapping effects of rising oil prices on consumer spending and the nation’s trade. National defense spending fell early this year, and budget-strapped state and local governments added to the weaker expenditures.
Many economists weren’t concerned too much about the slowdown, believing much of it was due to temporary factors such as higher fuel costs and harsh winter weather that further held back consumers.
Officials at the Federal Reserve as well as many private forecasters expect economic output to bounce back up to 3% or higher in the rest of the year -- although it remains to be seen whether global economic and political problems, particularly the unrest in the Middle East that is behind the spike in petroleum prices, will ease in the coming months.
Even with the slower pace of growth, the nation’s output in the first quarter, annualized, exceeded $15 trillion for the first time, as measured in current dollars. By this measure, the U.S. recovered from the recent deep recession in the spring of last year.
But the job market is another story. The U.S. economy today still has about 7 million fewer payroll jobs than it did at the end of 2007 when the recession began. And though hiring has picked up in recent months, the gains haven’t been anywhere as quick or stellar as corporate profits -- as Thursday’s report on unemployment claims showed.
The Labor Department said the number of workers filing for jobless benefits for the first time rose by 25,000 to 429,000 in the week ending last Saturday. Although these figures are volatile from week to week, analysts noted that this was the third straight week in which the filings had exceeded 400,000. And the latest number is the highest since late January.
Some seasonal and temporary factors may have played a role in the latest jump in unemployment claims. That includes the Easter holiday and the disaster in Japan, which disrupted delivery of parts in the auto and electronics industry. Though analysts said it was too early to say the labor market was losing momentum, the report was nonetheless a discouraging sign in an economy that is struggling with nearly 9% unemployment.
Photo: a jobs sign on the front of the U.S. Chamber of Commerce building in Washington, D.C. Credit: Karen Bleier / AFP/Getty Images