April 30 - The cold snowy weather nearly froze U.S. growth, but economists don't expect the Fed to stop curtailing its bond purchases. Fred Katayama reports.
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A stunning slowdown in economic growth that was way below forecasts. The unusually cold snowy winter nearly froze U.S. growth. Gross domestic product expanded at a measly 1/10th percent clip in the first three months of this year, just a fraction of the rate of the previous quarter.
Strategist Liz Miller of Summit Place Financial Advisors:
SOUNDBITE: LIZ MILLER, STRATEGIST, SUMMIT PLACE FINANCIAL ADVISORS (ENGLISH) SAYING:
"It's a shock. Given we're 20 minutes into the market, everyone will sit back and say, let's wait for a revision."
Exports plummeted as overseas economies slowed and goods got stuck at ports amid the bad weather. The wet weather also hurt home building. And businesses didn't see a need to buy equipment or build up a lot of inventory, curtailing production.
The harsh weather kept consumers away from shopping malls, so they bought fewer goods. But they spent more on home heating and on medical services because of the Affordable Healthcare Act.
Now that the winter is gone, economists expect demand to bounce back and growth to pick up.
The GDP number comes just hours ahead of the end of the two-day meeting by Federal Reserve policymakers. Chief economist Markus Schomer of PineBridge Investments says the weak data won't prevent the Fed from curtailing its bond purchase program aimed at stimulating growth.
SOUNDBITE: MARKUS SCHOMER, CHIEF ECONOMIST, PINEBRIDGE INVESTMENTS (ENGLISH) SAYING:
"I'd be shocked if they take that number, we all know is whacky, and base a momentous decision with implications for the financial markets on that very low quality number."
This is just the first estimate of GDP. We'll get a revised estimate at the end of May.
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