PHOENIX — A new report revealed the U.S. economy grew in the first quarter, but the figure may be causing more alarm than hope.
According to Forbes, the Bureau of Economic Analysis estimates that in the first quarter of 2014, “the U.S. grew at a glacial 0.1 percent rate.” For comparison, in the final quarter of 2013, the real GDP of the U.S. increased 2.6 percent.
Jim Rounds, economist with the Scottsdale-based Elliott D. Pollack & Company, said the weather played a large part.
“What happened is, we had a really cold winter and a lot of people stopped buying things, they didn’t want to go out of their house (and) a lot of companies stopped producing things, and so it tipped the GDP number,” he told News/Talk 92.3 KTAR’s Mac & Gaydos Wednesday.
While he expected the number to be low, Rounds admitted he was surprised at just how low it actually was, but said there is the hope the number could be revised.
“I was actually thinking it was going to be closer to 1 percent…but coming in at 0.1, that’s much lower than I expected,” he said. “Also, keep in mind, they do revise these things after a couple more months go by. It might get revised up a little bit, but it’s still shocking.”
Rounds said it was still too early to tell if the United States is entering another recession, predicting that the second quarter would pick up quite a bit.
“What probably is going to happen…is a lot of that activity — the people buying stuff and the companies making stuff — they decided to postpone it to the next quarter,” Rounds explained. “A lot of the activity that would have occurred in this first quarter is probably going to happen in May and June, so we’re going to see a little bit of a boost, so that’s what I’m hoping for. We’re not really going to know until then.”
Even despite the 2013 and minor 2014 increase, the job market is still not where it should be.
“The GDP issue is the No. 1 data point that you start with when you talk about the economy, and then you go to jobs, and we haven’t really been creating jobs at a decent rate,” Rounds said. “It’s getting a little bit better now…but we’re still in that phase where you create the lower-paying jobs, but those that are getting jobs aren’t being paid a whole lot and we haven’t seen a lot of pay raises.”
At least one light at the end of the tunnel may actually happen with the Valley housing market — finally.
“We got hit harder than most states, in terms of the housing market…prices went up, faster than they probably should have…and now they’ve stabilized,” Rounds said. “Part of it is seasonal, but…I think you’re going to see some housing price appreciation in the second half of the year — it won’t be 20 to 30 percent, it might only be 5 to 10 percent — but we’re not going to see it for a little while.”