Page 15 - Min.ecem

U.S. NEWS A7
Friday 29 May 2015

US Financial Front:

Why a shrinking US economy last quarter isn’t cause for fear

A man welds parts in fans for industrial ventilation systems at cline would be the first value of exports and the Channel Islands. “We had
the Robinson Fans Inc. plant in Harmony, Pa. On Friday, the since the economy shrank larger value of imports — a lot of adverse factors,
government will likely say the economy shrank in the January- by an even sharper 2.1 per- will be more than first esti- from the harsh weather
March quarter for a second straight year, but steady job gains cent annual rate in the first mated. and consumers unwilling to
are widely expected to propel modestly healthy growth for the quarter of 2014. That quar- The stronger dollar hasn’t spend their gas savings to
rest of 2015. ter, too, was depressed only made U.S.-produced a stronger dollar and weak
in part by a bleak winter, goods more expensive economies overseas mak-
(AP Photo/Keith Srakocic) which kept many consum- overseas. It’s also made im- ing the trade deficit larger.”
ers home and some busi- ports cheaper for U.S. con- So far, most consumers
nesses closed. sumers. That combination haven’t used their gaso-
In its first estimate a month produces a wider trade line savings to spend much
ago, the government re- gap, which slows growth. more on other goods and
ported that the economy Some also think busi- services. The average U.S.
grew at a scant 0.2 percent ness stockpiling didn’t bol- pump price reached $2.03
rate in the January-March ster growth last quarter as a gallon in January, the
quarter. much as first estimated. lowest level in eight years.
That figure is expected to “We got hit with a double- Though the average has ris-
be sharply downgraded in whammy in the first quar- en back to $2.74, accord-
part because economists ter,” said Sung Won Sohn, ing to AAA, that’s still nearly
think the U.S. trade deficit an economics professor at a dollar below its point a
— the gap between the California State University, year ago.q

MARTIN CRUTSINGER each year.
AP Economics Writer Some sectors of the econ-
WASHINGTON (AP) — An- omy do remain subpar. En-
other first quarter of the ergy drillers, for example,
year. Another reversal for have been damaged by
the U.S. economy. Another persistently low energy pric-
expectation of a rebound es and are still cutting jobs
to come. and slowing production.
On Friday, the government The rise in the dollar is still
will likely estimate that the making U.S. manufactured
economy shrank in the goods pricier overseas.
January-March quarter for Yet the outlook has bright-
a second straight year, de- ened considerably since
pressed by brutal weather, winter. Most economists
a reeling energy sector and expect lower gas prices
an export slump caused by eventually to accelerate
a higher-valued dollar. consumer spending, the
Yet few will see any cause main fuel for the economy.
for panic. Analysts generally foresee
Steady job gains are widely the economy growing at
expected to propel mod- an annual rate of 2 per-
estly healthy growth for the cent to 2.5 percent in the
rest of 2015. A harsh winter current April-June quarter,
is gone. So is a labor dis- with further strengthening
pute that slowed trade at later in the year. That pace
West Coast ports. Home would mark a significant
sales and construction are gain from the 0.8 percent
rebounding. Business in- annualized drop they ex-
vestment is picking up. pect the government to
Many economists also report Friday in its revised
suspect that the govern- estimate for the January-
ment’s calculations have March quarter, according
tended to underestimate to a survey by FactSet.
growth in the first quarter of A quarterly economic de-