Two weeks ago it was revised down to -1.0%. Apparently it’s even worse.
The U.S. economy likely contracted at a much sharper pace in the first quarter than previously estimated with data on Wednesday showing weaker health care spending.
The Commerce Department’s quarterly services survey, or QSS, showed health care outlays were not as strong as the government had assumed when it published its second gross domestic product estimate for the first quarter last month.
The government reported that the economy contracted at a 1.0 percent annual rate in the January-March period. But with health care spending data now in hand, economists say growth probably declined at a rate of at least 1.7 percent.
A widening of the nation’s trade deficit in March had already led economists to anticipate a downward revision to GDP when the government publishes its third estimate later this month.
The first two estimates were wildly off the mark, so a third times is sure to get it right. Sadly, Summer of Recovery VI just may not come to fruition:
Daniel Silver, an economist at JPMorgan in New York, said there was some uncertainty about how the government would incorporate the QSS data into its health care consumption estimate in the GDP data.
“But it looks like there could be a significant downward revision to health care consumption, which would make the health care data more in line with most of the other components of GDP which looked weak in the first quarter,” said Silver.
Should first-quarter GDP be revised sharply lower, economists could trim their growth estimates for 2014, which had been dubbed as a break-out year.
Judging by Obama’s epic economic failures a 0% rate would seem like a break-out year.