In this week’s Economic Report, Dr. Rick Harper discusses the latest first quarter revision of the gross domestic product (GDP). According to the Bureau of Economic Analysis, GDP shows a 2.9% drop in the annual rate in January through March, the weakest quarter for the U.S. economy since the Great Recession.
“That’s quite weak. That’s well into recession territory. Of course, quarter two will come in positive, but not positive enough to offset some of that loss,” says Harper. He adds that this third revision for Quarter One GDP reflects a tough winter season that took its toll on the economy; it was disrupting retail sales, auto sales, and manufacturing.
Harper says consumer spending is also driving the downward pressure. Household debt levels are declining, and so is federal debt.
Additionally, he notes that employment growth is on the way back up, averaging creation of just over 200,000 new jobs per month. But, he says that’s short of the 300,000-500,000 job gain levels recorded in the past.
The first quarter GDP drop of 2.9% is unusual coming on the heels of the significant gains of the past couple of quarters. Third gross domestic product for the third quarter of 2013 showed an increase of 4.1% and an increase of 2.6% increase in the fourth quarter of last year.
All and all, Harper says the report was disappointing. But he says there are some silver linings including an improvement in the economy since March. “It’s improving at a slower rate of improvement than we would have hoped three, four, six months ago,” he says, continuing “Overall, we are seeing a weak first half in 2014, but overall we’re not in recession risk territory.”
Looking ahead, next weekend, the July Fourth holiday weekend, marks the start of a really big period for the region’s tourism economy. The Blue Angels will perform over Pensacola Beach the following week. “July is the biggest month for tourism in Northwest Florida. If you look at Escambia County, for example, bed tax revenues and thus hotel room revenues, run about four or five times as much as in January,” Harper says.
Dr. Rick Harper is director of the University of West Florida Office of Economic Development and Engagement (OEDE); firstname.lastname@example.org.