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Economy grows just 0.5 percent to open 2016

Economy grows just 0.5 percent to open 2016
© Greg Nash

The U.S. economy grew at its slowest pace in roughly two years, climbing just 0.5 percent in the first three months of 2016.

The U.S. economy reported subpar numbers in the first quarter for the third straight year. Economists surveyed by Bloomberg had predicted 0.7 percent growth.

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The Commerce Department said the low growth was due to a pullback in spending by both businesses and consumers as the first few months of 2016 were filled with anxiety about the state of the global economy. The economy grew 1.4 percent in the last quarter of 2015.

While the U.S. has consistently reported solid gains in categories like jobs and housing, there has been growing anxiety about the impact of a steep decline in oil prices on oil-producing nations. And growing concern about an economic slowdown in China has exacerbated the situation.

Economic anxiety appeared to be a major culprit for the disappointing new data. Personal income grew at a faster rate to open 2016 than it did to close out 2015, climbing $130.8 billion in the first quarter compared to $117.4 billion in the fourth quarter. However, gross domestic purchases were only up 0.9 percent in the first quarter, compared to a 1.5 percent increase the three months prior.

Ways and Means Committee Chairman Kevin BradyKevin Patrick BradyThe Hill's Morning Report - Biden may find zero GOP support for jobs plan GOP seeks new line of attack on Biden economic plans Calls grow from lawmakers for IRS to extend filing deadline MORE (R-Texas) called the new numbers a "real wake up call."

"Today’s report is further proof that the President's economic policies are moving America in the wrong direction," he said in a statement.

Underlining the lack of confidence Americans have in the economy is the fact that personal outlays grew at a slower rate in the first quarter, while at the same time personal saving climbed higher.

On Wednesday, the Federal Reserve announced it was not raising interest rates, citing as part of the reason that the economy “appears to have slowed.”

Thursday’s estimate is the first of three that the government will offer for the first quarter.