Grim US economic picture brightening after harsh winter

Associated Press

WASHINGTON

When the government updates its estimate today of how the U.S. economy fared last quarter, the number is pretty sure to be ugly. Horrible even.

The economy likely shrank at an annual rate of nearly 2 percent in the January-March quarter, economists estimate. That would be its bleakest performance since early 2009 in the depths of the Great Recession.

So why aren’t economists, businesses or investors likely to panic?

Because most agree that the economy last quarter was depressed by temporary factors — particularly the blast of Arctic chill and snow that shuttered factories, disrupted shipping and kept Americans away from shopping malls and auto dealerships.

Since then, the picture has brightened. Solid hiring, growth in manufacturing and surging auto sales have lifted the economy at a steady if still-unspectacular pace. That said, sluggish pay growth and a stumbling housing rebound have restrained the expansion. But the economy’s recovery continues.

“We had a very bad first quarter, but the first quarter is history,” said Craig Alexander, chief economist at TD Bank. “It doesn’t tell you where the economy is going, which is in a direction of more strength.”

Today’s report will be the government’s third and final estimate of the economy’s first-quarter performance.