The U.S. economy contracted in the first quarter, but by less than a previous estimate, a sign growth is on the comeback. Bobbi Rebell reports.
The economy wasn't as weak in the first quarter as previously thought, and things are getting better. The final GDP reading showed the economy shrank at a 0.2 percent annual growth rate. That was better than the previous estimate of down 0.7 percent. For one thing, the economy has moved past some serious but temporary problems that weighed on the first quarter. IHS' Nariman Behravesh: (SOUNDBITE) NARIMAN BEHRAVESH, CHIEF ECONOMIST, IHS (ENGLISH) SAYING: "One was very bad weather in the Northeast and the Midwest, which really hurt consumer spending. You can see that in the consumer spending numbers. It took a big dip from the fourth quarter to the first quarter. The other was the disruption in the West Coast ports of Oakland, Long Beach, Los Angeles, and that hurt trade. It killed exports, basically, in the first quarter. Helping improve the number - a stronger pace of consumer spending and inventory accumulation than previously estimated. Business investment spending was less weak than the government had estimated last month. OppenheimerFunds' Alec Young says, while things are getting better, the U.S. faces headwinds beyond its borders: (SOUNDBITE) ALEC YOUNG, INVESTMENT STRATEGIST, OPPENHEIMERFUNDS (ENGLISH) SAYING: "We think, it's really a function of global deleveraging that is ongoing, and it makes it very difficult for any one major economy to really pull away from the pack and post really impressive growth. That said, we don't think that that is necessarily a negative for asset markets, but we do expect this sort of subdued pace of expansion to continue." And so, Young sees the economy growing, but at a fairly sluggish pace of two-and-a-half percent this year.