News Column

Winter Slip: The Cohen Column

June 3, 2014

Isaac Cohen -- HispanicBusiness.com

Small-business owner (file image)
Small-business owner (file image)

The U.S. Department of Commerce reviewed the economic growth figures previously released, last April, of a meager rate of 0.1 percent for this year's first quarter. But the revision is downwards.

Now, the estimate is that the U.S. economy shrank 1 percent in the first quarter.

The severe winter in January and February provided the explanation for the first fall in economic growth in three years. Even so, the figure is evidence of the persistence of a slow recovery, which demands a stronger performance in the next quarters to achieve at least last year's modest rate of 2 percent growth.

Beyond the severe winter months, during the first quarter the other restraining factor was almost no replenishment of inventories, which took away 1.62 percent from growth. The weakness continued in April, because the Commerce Department also said personal consumption decreased 0.1 percent from March, adjusted for inflation the decrease in April was 0.3 percent.

Additionally, wages increased only 0.2 percent in April, indicating that consumer purchasing power remains weak.

For economic policy makers, low personal consumption and stagnant wages, together with lurking inflation, are not clear signals.

Particularly because stock markets are reaching new highs, corporate profits are strong and unemployment is decreasing.

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Isaac Cohen is an international analyst and consultant, a commentator on economic and financial issues for CNN en Español TV and radio, and a former director, UNECLAC Washington Office.



Source: HispanicBusiness.com (c) 2014. All rights reserved.


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