By Vicki Needham - 05/29/14 11:45 AM EDT
A top White House economist said Thursday that the economic slowdown in the first three months of the year was mostly due to the pullback in business stockpiles.
Jason Furman, chairman of the Council of Economic Advisers, said a first quarter economic contraction was “due almost entirely to a downward revision to the highly volatile inventories category.”
Furman noted that the unusually severe winter explains part of the difference in growth relative to previous quarters.
"Overall the first quarter was subject to a number of notable influences, including historically severe winter weather, which temporarily lowered growth,” he said.
Furman argued that a range of recent data from March and April, including jobs, manufacturing and housing “provide a more accurate and timely picture of where the economy is today.”
Estimates for the April-June period are ranging between 3.5 percent and 4 percent annual growth.
“The president will do everything he can either by acting through executive action or by working with Congress to push for steps that would raise growth and accelerate job creation, including fully paid-for investments in infrastructure, education and research, a reinstatement of extended unemployment insurance benefits and an increase in the minimum wage," Furman said.
Congress has run out of time to pass a five-month renewal of emergency jobless benefits. The Senate-passed measure ran through the end of May, but House Republicans have refused to consider the bill, essentially dooming its hopes of passage.
The long-term unemployed still make up about 38 percent of all of those looking for work.
Meanwhile the White House reported showed that while consumer spending rose, it was because of sharp increases in healthcare and utilities costs; the other elements of consumer spending increased only slightly.
In fact, spending on utilities surged more than 40 percent at an annual rate in the first quarter, the largest increase on record, with data back to 1959.
While this weather-related jump in utilities spending added to growth, it was more than offset by the other effects of the bad weather, which held back spending at stores and restaurants.
Consumer spending on food services and accommodations fell for the first time in four years, probably because of the cold weather, the White House said.
Meanwhile, exports and inventory investment, two volatile components of growth, also subtracted from growth.
The federal sector made a small positive contribution to growth for the first time in more than a year, in part because the effect of the government shutdown in the fourth quarter were reversed.
In the fourth quarter of last year, federal worker furloughs resulting from the government shutdown directly reduced gross domestic product growth by 0.3 percentage points at an annual rate. The other effects of the shutdown, including reduced government purchases of goods and services, also likely contributed to the 1 percentage point negative contribution from the federal government.
In the first quarter, the federal sector made a 0.05 percentage point positive contribution to growth, in part because of the return to a full quarter of undisrupted federal employee work hours.