The March trade deficit grew to $51.4 billion, which has many economist now predicting subsequent revisions to first-quarter GDP will show the economy contracted for the first time since contracting -2.1% in the first quarter of 2014. In the first quarter the advanced reading on GDP or economic growth was reported at .2% which was below an expectation of a Q1 growth rate of 1%. The large increase in the trade deficit is being attributed to resolution of the West Coast labor dispute resulting in a spike in imports and to U.S. export headwinds due to the strong dollar.
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| From The Blog of HORAN Capital Advisors |
In our Spring 2015 Investor Letter, we discussed the recurring weakness seen in the first quarter GDP reports since the end of the financial crisis. A larger issue is the slow pace of economic growth that has occurred since the end of the financial crisis in the 2009 and why has this been the case?
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| From The Blog of HORAN Capital Advisors |
As can be seen in the below chart, GDP growth averaged 3.46% from 1950 through March 2009. However, since March 2009 GDP growth has averaged nearly 40% less at 2.13%.
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| From The Blog of HORAN Capital Advisors |