Economy Grew At Weakest Quarterly Pace In Two Years, Data Shows
According to the latest Labor Department data on Gross Domestic Product, in Q1 2016 the US’ GDP showed signs of weakness. GDP “grew at its weakest quarterly pace in two years” between January and March, the Washington Post “Wonkblog” reports. Noting that the GDP “expanded just 0.5 percent on an annualized pace,” the Post says the “relatively tepid growth indicates that the economy is still being held back by apprehension and caution.” According to CNN Money, the growth rate “was even lower than economists’ anemic expectations of 0.7%,” as “Americans are feeling a little less confident about opening up their wallets” and instead decided to save more, increasing the saving rate to 5.2% from 5% in the previous quarter. The AP reports the first three months of 2016 saw consumer spending, “which accounts for 70 percent of the US economic activity,” increased at a 1.9% rate, down 0.5% from the final quarter of 2015. Meanwhile, business investment fell at a 5.9% rate, with the biggest such decline since 2009 “led by a record 86 percent plunge in the category that covers oil and gas exploration.” USA Today adds that exports “fell 2.6% after sliding 2% in the previous quarter while imports rose, widening the trade deficit.” The article notes that the strong US dollar and weak global economy have hurt US exporters, while the strong dollar has helped increase imports.
What This Means For Small Businesses
Unfortunately, the latest dismal news on US GDP growth should come as little surprise to many US small business owners, many of whom are suffering due to a general pattern of economic uncertainty following the recession. NFIB’s latest Small Business Economic Trends report indicated that small business owners are less optimistic about the economy overall, and sales growth has been weak for many. When small businesses suffer, the US economy as a whole loses steam.
CNBC also covers the latest GDP data.
Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.