The Bureau of Economic Analysis reported today that the advance estimate of gross domestic product (GDP) grew at a seasonally adjusted annual rate of 0.5 percent in the first quarter, below the consensus estimate of 0.7 percent.

In many ways, the weak reading is reminiscent of the weak first quarter results that we’ve seen for the last decades (see my article about weak first quarter GDP from last year by clicking here).  While we don’t have a polar vortex to blame this year, the Commerce Department is looking into changes that could affect the seasonal adjustments.

The big story in my judgement is the ongoing slowdown in household outlays, which gained 1.9 percent compared to 2.4 percent in the fourth quarter.  Consumer spending represents about two-thirds of all economic activity, so the slowdown has an outsized impact.

Business spending also dragged down first quarter GDP falling -5.9 percent after a -2.4 percent decline in the fourth quarter.  Equipment spending also declined, dropping -8.6 percent after a decline of -2.1 percent last quarter.

All-in-all, the weak reading was consistent with the slow growth economic environment that we’ve endured since the 2008 financial crisis and, unfortunately, there is nothing on the horizon that would suggest that we’re about to break out of our two percent annualized growth rate anytime soon.