Real GDP grew by just 0.2% (annualized) in the first quarter of 2015, underwhelming expectations for 1.0%. Personal consumption expenditures grew by 1.9%, ahead of the consensus forecast for 1.7%, but decelerating considerably from 4.4% growth in the fourth quarter.
On the temporary front, poor weather and West coast port disruptions contributed to the weakness. Another relatively fleeting factor is the fall in oil and gas investment. The rising dollar will continue to weigh on net-exports in the quarters ahead.
"The slowdown in consumer spending is hard to reconcile with the acceleration in real income growth in the first quarter. If weather is to blame, spending will bounce back in months ahead." - says TD Economics
Indeed, the strength in real income growth is perhaps the best reason for optimism that the setback in growth will be temporary. The benefit of lower oil prices may not show up instantaneously, but over time the three-quarter increase in real income growth will make its way into consumer spending.
