The U.S. economy contracted in the first quarter, as the dollar hit corporate profits. Consumer confidence gains some traction but still weak. Bobbi Rebell reports.
Blame the snow, the port strike, and of course the strong dollar, but there's no way around it. The U.S. economy took a step back in the first quarter. Gross Domestic Product down at a pace of 0.7 percent, instead of the first government estimate of 0.2 percent. But things are looking up says IHS Global Insight's Nariman Behravesh: SOUNDBITE: NARIMAN BEHRAVESH, CHIEF ECONOMIST, IHS GLOBAL INSIGHT (ENGLISH) SAYING: "A number of factors that pulled down the first quarter were temporary including bad weather, and the dock strikes on the West Coast, which totally interrupted the trade pattern so those two are going away. They have gone away basically, so we would expect growth in the second quarter to come back around 2 percent and by the third quarter maybe around 3 percent." But the first six months of 2015 is shaping up to be the worst first-half performance since 2011. Investors also faced weak data on factory activity and consumer sentiment on Friday. And the strong dollar continues to weigh on the economy. Multinationals like Microsoft, household products maker Procter & Gamble, and healthcare conglomerate Johnson & Johnson have warned the dollar will hit sales and profits this year. But Behravesh says it won't deter the economy from bouncing back. SOUNDBITE: NARIMAN BEHRAVESH, CHIEF ECONOMIST, IHS GLOBAL INSIGHT (ENGLISH) SAYING: "It's not going to be a recovery killer. The US is not that export dependent, exports are only 13% of GDP compared with consumer spending which is 68 percent of GDP." The good news- while consumer sentiment has been weakening in recent months, the University of Michigan report showed signs of traction in the latter half of May.