FOR the world’s largest economy, 2015 has been a series of disappointments. In March builders began construction on just 944,000 new homes, well short of the million or more that had been expected. In April the number of people out of work and claiming benefits exceeded economists’ predictions. And on May 29th official data, which had previously suggested the economy had grown by 0.2% at an annualised rate in the first quarter, were revised to show a contraction of 0.7%. Consumption slowed, investment slid 2.8% and exports dropped by 7.6%.
America still accounts for 23% of the world’s output, so a sustained slowdown would have global impact. Happily, most economists offer a comforting explanation: this is all temporary. Start with America’s dreadful weather. Though this year escaped the “polar vortex” (the weather system that dragged down temperatures and output in 2014), it was bitterly cold. Thermometers showed record lows in many eastern cities in February. With streets so icy and air so cold it is no wonder consumption expanded at just 1.8% at an annualised rate, much lower than the 4.4% of the previous quarter.
A simple analysis by Aneta Markowska of Société Générale, a French bank, tracks the correlation between anomalous temperatures and GDP. It suggests that the freeze lowered first-quarter growth by around 1.9 percentage points. The good news...
from The Economist: Finance and economics http://ift.tt/1KcktJw
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