Outlook and Market Review - First Quarter 2014

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Summary: 

GDP growth was a dismal 0.1% in the first quarter according to the preliminary announcement by the Bureau of Economic Analysis. Growth in the fourth quarter was revised up to 2.6%. First quarter growth was below expectations, partly due to severe weather, but a number of fundamental weaknesses in the economy were also in play. The only positive component in GDP was consumption spending. Spending growth exceeded growth in personal income resulting in a decline of the saving rate to 4.1% in March with a continued decline to 3.8% in April. Consumers used nonrevolving credit heavily to support spending. High levels of consumer demand is encouraging but growth in personal income, growth in housing and equity values, and low interest rates will all be needed to generate sufficient spending for higher growth.