Surprise surprise. The world's largest economy appeared to be not so resilient to harsh winter conditions, as first quarter's growth missed forecasts dramatically. Analysts were betting for a stronger growth, as comments from the U.S. officials boosted confidence the economy is building up steam. Immediately after the release of the disastrous figures, the most traded currency pair soared almost to the recent high, reaching 1.3871 and moving closer to the 1.39-mark, adding more pressure on the ECB to counter strong Euro.
On Wednesday, the Department of Commerce said the economic output climbed only 0.1% in the first quarter from the same period a year earlier, compared to forecasts of a 1.2% expansion and following the 2.6% growth three months earlier. The main upside pressure, as always, came from consumer spending, which added more than 2% to the output, however, it was partially offset by weak private investment, which cut almost a percentage point. Moreover, weak foreign trade subtracted around 0.83% from the GDP.
These figures will find an echo in FOMC comments later this week. While the slowdown reflected weaker exports and investors' reluctance to invest in the United States, some of the economists may claim the deceleration will be temporary and the economy will build up the steam soon.
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