WASHINGTON (AP) — The U.S. economy inched forward at the weakest pace in two years from January through March, as consumer spending growth slowed, business investment plunged and exports declined further.
The gross domestic product, the broadest measure of economic health, grew by a tiny 0.5 percent in the first quarter, the Commerce Department reported Thursday. That is down from 1.4 percent growth in the fourth quarter.
The January-March performance was the poorest showing since GDP contracted by 0.9 percent in the first three months of 2014.
Since this recovery began almost seven years ago, GDP has been weak in the first quarter each year only to rebound in the spring. Economists are looking for a similar pattern this year, forecasting second quarter growth of around 2 percent.
Business investment dropped at a 5.9 percent rate, the biggest quarterly plunge since the depths of the recession in 2009. The decline was led by a record 86 percent plunge in the category that covers oil and gas exploration. U.S. energy companies have cut back sharply in response to falling global oil prices.
The Federal Reserve, wrapping up two days of discussion on Wednesday, took note of weak spots in the U.S. economy and decided for the third straight meeting to keep its key policy rate unchanged in a range of 0.25 percent to 0.5 percent. The Fed said that “economic activity appears to have slowed,” citing a moderation in consumer spending and weakness in business investment and exports.
The Fed, which raised rates by a quarter-point in December, gave no hint on when it might raise rates again and many economists are pushing back their own expectations which had predicted a rate hike in June. Now some say they expect the Fed to wait until September or perhaps December before hiking again.