Growth in American economy freezes due to the bad weather

 
Charlotte Henry
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The slowdown has been blamed on bad weather dampening consumer spending (Source: Getty)
US economic growth stalled in the first three months of 2015, growing just 0.2 per cent compared to the same time last year.

Growth was 2.2 per cent in the final quarter of 2014, and economists had expected the economy to expand one per cent in the first quarter of 2015.

The slowdown has been blamed on bad weather dampening consumer spending, and energy companies having to cut spending in the face of falling oil prices.

A strong dollar and an industrial dispute at normally busy West Coast ports also put a break on growth, the US government said.

The numbers, while disappointing, are unlikely to be a true reflection of the state of the American economy, but instead the result of those temporary factors.

The negative consequences of the bad weather were particularly clear in consumer spending, which slowed to 1.9 per cent, the slowest rate in a year. Consumer spending accounts for more than two-thirds of economic activity in America.

The decline came even though US households enjoyed huge savings at the petrol pump.

While the American government declined to estimate the cost of those factors, economists estimated that an unusually cold February reduced growth by up to half a per cent. The disruptions to ports took another 0.3 per cent off the total.

Lower energy prices, which have cut into domestic oil production, undermined business investment.

The recovery is the slowest on record and the economy has yet to experience annual growth in excess of 2.5 per cent.

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