Sunday, December 10, 2017
Business

U.S. economy shrank at 2.9 percent rate in Q1

WASHINGTON — The U.S. economy shrank at a steep annual rate of 2.9 percent in the January-March quarter as a harsh winter contributed to the biggest contraction since the depths of the recession five years ago. But the setback is widely thought to be temporary, with growth rebounding solidly since spring.

The first-quarter contraction reported Wednesday by the government was even more severe than the 1 percent annual decline it had estimated a month ago. Much of the downward revision reflected an unexpectedly sharp drop in health care spending. Another factor was a bigger trade deficit than earlier estimated.

Though such a sharp economic decline would typically stoke fears of another recession, analysts see it as a short-lived result of winter storms that shut factories, disrupted shipping and kept Americans away from shopping malls and auto dealerships. Many expect the gross domestic product, or GDP, to grow at a robust annual rate of 3.5 percent or better this quarter.

"Despite the awful start to the year, the U.S. economy is nowhere close to a recession," said Sal Guatieri, senior economist at BMO Capital Markets.

Guatieri thinks growth is rebounding to a 3.8 percent annual rate in the current quarter and will average a solid 3 percent rate in the second half of the year.

Other analysts noted that several likely temporary factors slowed the economy last quarter — from businesses reducing their pace of restocking to companies paring their purchases of equipment. Also, a wider trade deficit cut 1.5 percentage points from growth. Housing construction slumped.

Those negative forces will likely turn positive this quarter, analysts said. The economy is getting a lift from an improving job market, which has added more than 200,000 jobs each month over the past four months.

"We had one-time hits from the weather, business inventories and trade in the first quarter," said Gus Faucher, senior economist at PNC Financial. "Things are looking much better for the rest of this year. Job gains are allowing households to increase their spending, with higher stock prices and home values also helping."

Last quarter's 2.9 percent annual decline in GDP followed a 2.6 percent gain in the fourth quarter. It was the weakest showing since the economy shrank at a 5.4 percent annual rate in the first quarter of 2009 in the midst of the Great Recession.

Two-thirds of Wednesday's downward revision in overall activity reflected weaker spending on health care. Instead of growing at a 1 percent rate in the first quarter, health care spending actually fell at a 0.2 percent annual rate, the government estimated. It was the first quarterly drop in health care spending since 2011.

Analysts said the government was too optimistic about the boost the new health care law would give to spending in the first quarter. The harsh winter likely caused some people to delay elective surgeries and doctor visits. Analysts predicted that health care spending would rebound as people who have gained health insurance begin using their coverage.

Reports on consumer spending, manufacturing and business investment have shown a solid rebound. Orders for big-ticket manufactured goods excluding military hardware and for core capital goods, a proxy for business investment, rose strongly in May, a report Wednesday showed.

Analysts say solid hiring, growth in manufacturing and surging auto sales are contributing to a stronger economy. A stumbling housing recovery has been a concern. But even there, recent data on home sales and construction have been encouraging.

Comments
Tampa: Hundreds protest Trump’s decision on Jerusalem

Tampa: Hundreds protest Trump’s decision on Jerusalem

TAMPA — Hundreds rallied near the University of South Florida on Friday night to protest President Donald Trump’s recent declaration that the United States will recognize the divided city of Jerusalem as the capital of Israel.The protest was organize...
Published: 12/08/17
Updated: 12/09/17

Duke outage leaves 7,700 without power near Pinellas Park

PINELLAS PARK — Up to 7,700 customers across Pinellas Park, Lealman and Kenneth City lost power in a Thursday night outage, according to Duke Energy.The outage impacted a cloverleaf-shaped area of customers, with pedals extending in the cardinal dire...
Published: 12/08/17
Express lanes set to open on Veterans. They’re free -- for now.

Express lanes set to open on Veterans. They’re free -- for now.

TAMPA — Drivers on the Veterans Expressway will gain an extra lane from Gunn Highway to Hillsborough Avenue starting Saturday.But there’s a catch: Once drivers enter the lane, they won’t be able to leave it — not until a designated exit about six mil...
Published: 12/08/17
St. Petersburg chamber of commerce charts ‘Grow Smarter’ economic development strategy

St. Petersburg chamber of commerce charts ‘Grow Smarter’ economic development strategy

Times Staff WriterST. PETERSBURG — What started more than five years ago as an exploratory conversation among a handful of business leaders blossomed Friday into a full-blown community discussion of how to nurture business while working to make sure ...
Published: 12/08/17
Visit St. Pete/Clearwater makes Orlando tourists a top target

Visit St. Pete/Clearwater makes Orlando tourists a top target

In a decision driven by some major data crunching, Visit St. Pete/Clearwater next year will focus its tourism advertising on three target markets: Orlando, New York City and its Tampa Bay home."Research is going to dictate our behaviors and direction...
Published: 12/08/17
Having JW Marriott run Water Street Tampa’s new 519-room hotel expected to help Tampa pursue more upscale conventions

Having JW Marriott run Water Street Tampa’s new 519-room hotel expected to help Tampa pursue more upscale conventions

TAMPA — JW Marriott, a luxury hotel brand new to Tampa, will run the new 519-room hotel that the Water Street Tampa project is building next to the Marriott Waterside Hotel & Marina, developers announced Friday.Construction on the 26-story hotel is ...
Published: 12/08/17

Gravel spill shuts down parts of northbound Howard Frankland Bridge

TAMPA — Authorities are cleaning up a load of gravel spilled onto the northbound Howard Frankland Bridge on Friday afternoon, shutting down at least two lanes of traffic.The incident was reported at 2 p.m. on the stretch of the bridge drivers approac...
Published: 12/08/17
A longer wait: Some now try nearly 3 years to get disability insurance

A longer wait: Some now try nearly 3 years to get disability insurance

By the time Teralyn Fleming could finally plead her case to get federal disability insurance, she had been waiting two years and three months. The wait was not a peaceful one — a blood clotting disorder pushed her out of the workforce in 2015 ...
Published: 12/08/17
Why has bitcoin’s price shot up so fast?

Why has bitcoin’s price shot up so fast?

SAN FRANCISCO — Bitcoin has been in a bull market like few the world has ever seen.At the beginning of the year, the price of a bitcoin was below $1,000. It hit $5,000 in October, then doubled by late November. And on Thursday, less than two weeks la...
Published: 12/08/17
U.S. employers added 228,000 jobs in November, unemployment rate stays at 4.1 percent

U.S. employers added 228,000 jobs in November, unemployment rate stays at 4.1 percent

WASHINGTON — U.S. employers added a robust 228,000 jobs in November, a sign of the job market’s enduring strength in its ninth year of economic recovery. The unemployment rate remained at a 17-year low of 4.1 percent, the Labor Department reported F...
Published: 12/08/17