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Economic Expansion in the First Quarter - 5/19/15

According to the Bureau of Economic Analysis’ initial estimate, the U.S. economy managed to expand zero point two percent on an annualized basis during the first three months of the year.  However, new data regarding the U.S. trade deficit for March suggest that the first quarter gross domestic product estimate will be revised into negative territory.  If that happens, it will represent the second time over the last two years that the U.S. economy failed to expand during the first quarter. 

Given the March trade data, Barclays now estimates that gross domestic product fell at a zero point three percent rate during the year’s initial quarter.  Macroeconomic advisers now estimates growth at negative zero point four percent, and Goldman Sachs has reduced its estimate to negative zero point five percent.  As indicated by writer Neil Irwin, one of the head winds facing the U.S. economy over the past year has been a strengthening U.S. dollar. 

The dollar index, which measures the value of the U.S. dollar against six other major currencies, expanded by roughly twenty-five percent from the beginning of last July through March thirteenth.  That helped Americans purchase more imported products while diminishing the ability of American exporters to penetrate foreign markets.

Anirban Basu, Chariman Chief Executive Officer of Sage Policy Group (SPG), is one of the Mid-Atlantic region's leading economic consultants. Prior to founding SPG he was Chairman and CEO of Optimal Solutions Group, a company he co-founded and which continues to operate. Anirban has also served as Director of Applied Economics and Senior Economist for RESI, where he used his extensive knowledge of the Mid-Atlantic region to support numerous clients in their strategic decision-making processes. Clients have included the Maryland Department of Transportation, St. Paul Companies, Baltimore Symphony Orchestra Players Committee and the Martin O'Malley mayoral campaign.