InvestmentsApr 29 2015

Shock for markets as US growth plummets

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Shock for markets as US growth plummets

Growth in the US economy collapsed in the first three months of 2015, according to figures from the US Bureau of Economic Analysis (BEA).

The BEA data showed the world’s largest economy grew at an annual rate of 0.2 per cent in the first quarter of this year.

The figure represented a huge fall from the 2.2 per cent growth seen in the final quarter of 2014 and was lower than the 1 per cent growth predicted by economists.

The BEA said there were positive contributions to growth from “personal consumption expenditures and private inventory investment”.

But it said these positives were largely offset by “negative contributions from exports, non-residential fixed investment, and state and local government spending”, while an increase in imports also took its toll on growth.

The markets have reacted negatively to the US announcement, with the FTSE 100 index suffering a sharp sell-off to take it down by nearly 1 per cent so far today.

However, the figure is only the first of several estimates and US growth numbers have tended to be revised upwards or downwards substantially when more data is collected.