The news from the Commerce Department on Friday that the U.S. economy had grown at a rate of only 2.2 percent.in the first three months of the year was disappointing to those expecting a higher figure. But not so much so that the underwhelming report set back all hopes for a steady recovery.
The report didn’t seem to be weighing on the stock market, as the Dow Jones industrial average, S&P 500 Index and Nasdaq had all posted small gains by early afternoon.
And the reaction to the data from economists and analysts was mixed, with some seeing it as a sign of economic improvement , others as a harbinger of more struggle to come. Analysts’ had predicted a 2.5 percent growth rate, lower than 3 percent rate from the end of last year.
Scott Hoyt, senior director of consumer economics at Moody’s Analytics, had a relatively upbeat take. “Despite the weak start to the year, the economy appears solid...,” Hoyt said in a statement. “While hardly a boom pace, this is strong enough to expand employment and reduce joblessness especially as some of the current drags wane in the second half of the year.”
But John Ryding and Conrad DeQuadros of RDQ economics called the data “disappointing” and “puzzling.” In a statement, they wondered: “Private sector hours worked rose 3.7% in the first quarter—what were these workers producing? The unemployment rate fell from 8.5% in December to 8.2% in March—how can this be if the economy was only growing at around its potential rate?”
Researchers at Barclays used the data to analyze the nation’s jobs picture. “We view this report as consistent with our judgment that there is not as much slack in the labor market as the high unemployment rate would suggest,” they said in a statement.
There’s no clear consensus, thought it is clear that there are a host of factors that have the potential to throw the nation’s recovery off course. Hoyt, the analyst from Moody’s, offered a good roundup.
“There are numerous threats to this relatively optimistic baseline outlook: a rise in oil and gasoline prices, a rekindled European debt crisis, a deeper housing crash, more federal fiscal drag than expected, and a harder landing in China and other emerging-market economies,” Hoyt said. “But most of these possibilities feel less threatening than they did a few months ago.”
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