America’s economy has cooled down this year.
The U.S. gross domestic product, the broadest measure of economic growth, only rose 0.2% in the first quarter, well below expectations that growth would be 1%.
It’s better than a year ago when the “Polar Vortex” turned the GDP negative, but it’s still not welcome news. The cold winter weather, the strong U.S. dollar and West Coast port strike contributed to the weak economic growth this year.
“The U.S. economy stumbled badly in the first quarter,” says Scott Anderson, chief economist at Bank of the West.
The sluggish growth raised two warning signs. Business spending fell off a cliff. Investments in structures — new office buildings or renovations — fell 23% in the first quarter, the biggest decline in any category of GDP.
The port strike and strong dollar really hurt U.S. businesses abroad too. Exports declined over 7%. Although the strong dollar is great for American travelers, it makes U.S. products, like cars, more expensive abroad and less attractive to foreign buyers.
But above all, it was just really cold. Some parts of the U.S. received record amounts of snow. That weather canceled flights, closed schools and shuttered businesses for several days.
“The economy is just stalled,” says Marie Schofield, chief economist at Columbia Threadneedle Investments in Boston. “The Northeast and the Midwest were hit really hard by weather.”
The silver lining is that 2015 could be a repeat of last year: Weak growth in the first few months followed by a robust comeback for the rest of the year. There was one solid sign in first quarter GDP: consumer spending rose more than expected, but was much weaker than the previous three quarters.