The United States gross domestic product decreased by an annual rate of 1 percent in the first quarter of 2014, but thanks to inclement weather and good jobs numbers, that doesn't appear to be a big deal.
Economists predicted a slowing of growth to start 2014 – a 0.1 percent increase – but the report from Bureau of Economic Analysis showed the first GDP contraction in three years. The Wall Street Journal points out that this is quite the rarity: "The U.S. economy has only contracted a handful of times since 1947 in any quarter outside of a recession ... Average two consecutive quarters together and there have been no declines when the economy wasn’t in a recession."
So does a rare GDP contraction to start the year have economists uneasy? Apparently not. Ben Casselman at FiveThirtyEight writes, "there are some good reasons not to be too concerned by Thursday’s report ... most economists expect a strong bounce back in the second quarter." Northwestern University's Robert Gordon told the WSJ that "Nobody thinks that there’s any significance to the first quarter being negative." Ylan Q. Mui at The Washington Post writes that a poor first quarter in 2014 "is not likely to derail [the economic recovery] altogether" and the second quarter is on pace for GDP growth near 3 percent.
Most blame the decline in GDP on the weather. This past winter, and it's infamous polar vortex, "disrupted work sites, curtailed foot traffic at retail stores and snarled transportation networks," according to the WSJ. CNBC reports that weather may have cut "as much as 1.5 percentage points from GDP growth." That's why economists predicted dismal growth for Q1, and why the economy shrank; lousy weather means lousy economic growth. Which means the contraction in Q1 is more seasonal rather than a significant indication of the economy's trend.
Job growth, too, has assuaged concern over this dip in GDP. Vox's Matt Yglesias explains that "initial claims for Unemployment Insurance benefits have fallen to their lowest level since August 2007" and before May, the economy was adding an average of more than 200,000 jobs monthly in 2014.
It's never great to see the economy contract, particularly when positive (albeit minimal) growth was predicted. But economists, for now, seem confident this isn't a harbinger of doom. Of course, we'll have to see how the rest of 2014 goes before we're out of the woods.