A chilly winter is finally behind us, and flowers are starting to bloom. The U.S. economy kicked off the year with a disappointing first quarter as consumers and businesses weathered symptoms of a global slowdown. Thankfully, seasons change, and we’re seeing signs of thaw in leading economic data.
The U.S. economy likely hit a soft patch last quarter, with forecasters predicting it could have been the slowest quarter for gross domestic product (GDP) growth in three years. Even though last quarter felt especially rough, it’s important to consider that there are seasonal tendencies in the data that have been hard to remove.
Chilled growth in the winter has been typical in this expansion [Figure 1]. Since the cycle began in 2009, the first quarter has grown an average of 1.7%, the weakest quarter for output growth. Winter could be to blame for seasonal weakness, as inclement weather can inhibit consumer activity.
This year, consumers also had to contend with a record government shutdown and an influx of negative global headlines. Consumer spending, which accounts for about 70% of output, likely added 0.4% to first-quarter GDP, according to the Federal Reserve (Fed) Bank of Atlanta’s model. That would be well below consumer spending’s 1.7% contribution to output over the past three years. We see lower…