The Bureau of Economic Analysis said that the U.S. economy grew by 0.8 percent in the first quarter of 2016, up from the prior estimate of 0.5 percent. The revision stemmed from better fixed investment, inventories and net exports data. Nonetheless, it is clear that the economy remained challenged, with the improvements in these categories reducing the pace to which each was a drag on real GDP growth. Overall, U.S. economic growth has been disappointing through the first three months of 2016, extending the sluggishness seen at the end of 2015. Indeed, the underlying story remained the same as noted in the prior release. Consumers and businesses were cautious in the first quarter, dampening real GDP growth, and the strong U.S. dollar and struggling economies abroad meant that net exports subtracted from growth in the quarter.
We have become accustomed to having a bad first quarter following by a strong rebound in the second quarter. In 2015, for instance, first and second quarter real GDP growth was 0.6 percent and 3.9 percent, respectively. I continue to expect a rebound in the current quarter, as well, with my forecast for second quarter 2016 growth currently at 2.5 percent. For 2016 as a whole, I am predicting 2.0 percent growth. Read More