The economy just had its worst quarter since the Great Recession. Here’s why you shouldn’t worry. It turns out that, at an annual rate, the economy shrank 2.9 percent in the first quarter of 2014, mostly due to weak exports, weak inventories, unexpectedly weak health-care spending and the harsh winter. If you dig beneath the headline numbers, the economy, in all likelihood, is still growing at the same slow and steady 2 percent pace that it has been for the whole recovery. One way to tell, as Council of Economic Advisers Chair Jason Furman points out, is that total hours worked increased as much as youd expect if the economy were growing 2 percent, and not contracting 2.9 percent. As you can see below, theres normally a pretty strong relationship between the increase in hours and the increase in GDP, but there wasnt this past quarter. Thats probably just a statistical blip.
Posted on: Thu, 26 Jun 2014 06:27:38 +0000
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