U.S. Economy Slows Down

• 05.01.2015, 11:40
•  America,  World

The official data shows that the U.S. economic growth slows to 0.2 percent for the first three months of the year. The real figure is far lower than the expected numbers, because the analysts had forecasted growth to be about 1 percent, BBC reports.

There are different reasons for such slow economic growth. Many economic slowdown activities lead the economy to record insignificant grow index. One of the reasons is bad weather. Harsh winter disrupted the works on the ports. There is no official numbers from the Commerce Department about the impact of weather on the export and import, but the estimations show that it has reduced by 0.3 percentage points. The consumer spending that is two-third of U.S. economic activity slowed to 1.9 percent, while it had 4.4 percent growth at the end of 2014.

 In its turn the strong dollar also had very big negative impact on the export, which fell by 7.2 percent. The U.S. currency has risen on the back of expected rate rises by the Federal Reserves. The dollar has hit its highest level in 10 years against euro and yen, which are its trading partners. It has hit also the ability of the country’s export to sell their products overseas. In terms of imports and consumption the strong dollar has positive impact, which has recorded 1.8 percent growth. The only positive impact of strong dollar is that it keeps imports cheaper and keeps down the prices. It leads to expand consumption by 1.9 percent. So, the small growth of the U.S. economy was due to private consumption and investment, which is not in every sector of the economy.

One of the significant negative effects on the economy was by low oil prices. Low prices led to a slowdown in U.S. oil production and big quantity of investments was reduced in this sector. Overall investment dropped by 48.7 percent in mining, exploration, shafts and oil wells.

The U.S. economy over last year has expanded by 3 percent and economists expect to have the same growth pace for this year, too.