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U.S. economy grew at anemic 0.2% pace in Q1

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U.S. economy grew at anemic 0.2% pace in Q1

The economy slowed significantly in the first quarter as cold weather, a strong dollar and shipping snags dampened activity. Gross domestic product — the value of goods and services produced in the U.S. — expanded at a seasonally adjusted annual rate of 0.2% in first quarter, the Commerce Department said Wednesday. That’s down from 2.2% in the fourth quarter.635658913033013115-AP-ECONOMY-GDP-72666340

The report was the government’s first estimate of first-quarter GDP. Two revised estimates, based on more complete data, will be published in May and June. First-quarter growth was substantially less than the 1% expected by economists surveyed by Action Economics. Analysts say the slowdown largely reflects temporary factors, such as harsh weather and a labor dispute at West Coast ports that hampered exports and delayed deliveries to factories and retailers.

Other economic headwinds could linger, including a strong dollar that’s making U.S. goods more expensive for foreign buyers and a pullback in energy company investment amid a plunge in oil prices. Business investment, for example, fell 3.4% after increasing 4.4% in the previous quarter as the muscular greenback dented manufacturers’ sales. And investment in non-residential structures plunged 23.1% in the quarter, in large part a consequence of the oil price slump, as energy companies sharply reduced the number of oil drilling rigs.

Exports dropped 7.2% as manufacturers lost sales to other countries with more favorable currency exchange rates. Consumer spending, which makes up more than two-thirds of economic activity, also slowed, growing 1.9% compared with 4.4% in the fourth quarter. Rough weather kept many shoppers at home. And government spending declined 0.8% as defense and state and local outlays all fell.

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