STACEY VANEK SMITH: The country’s GDP grew a dismal 1.8 percent in the first quarter of the year. Gross Domestic Product is a measure of all the goods and services a country produces. It’s considered to be one of the most important economic indicators.
Here to talk GDP with us is David Wyss, Chief Economist with Standard & Poor’s. He joins us live. David, Good morning!
DAVID WYSS: Good morning.
SMITH: David, why did the economy grow so slowly in the first quarter?
WYSS: I think the main things — obviously weather was a problem. Remember January and February everybody was snowed in. They couldn’t get to the shop. In addition of course oil prices are double where they were early last year. We’re up around over $100, gasoline approaching $4. That’s a strain on pocketbooks. And then the rise in food prices, which in turn was largely caused by the bad weather, took another bite out of people’s paychecks.
SMITH: Well the snow was obviously temporary. But oil prices are still really high. Gas prices are high. And food prices continue to be pretty high. Do you expect GDP will grow more next quarter?
WYSS: Well the weather should improve. Obviously that’s going to help. Food prices are actually starting to come down, particularly the fruit and vegetable prices that spiked up so much in January. So that should be a little bit of a help. So I think the second quarter will be better. I don’t think it will be great, but I think we’ll be back near that 3 percent that we saw back in the fourth quarter.
SMITH: Yesterday we heard Federal Reserve chairman Ben Bernanke say he’s not planning to raise interest rates even though the dollar’s value has been really low. How will that affect economic growth?
WYSS: Well, at least it won’t hurt it. I like lower interest rates are clearly good for the economy. They’re better than high interest rates, but when they’re this low, you can’t push any harder on that string. They’re doing as much as they can.
SMITH: Economist David Wyss. David thank you so much.
WYSS: Thank you.
Marketplace is on a mission.
We believe Main Street matters as much as Wall Street, economic news is made relevant and real through human stories, and a touch of humor helps enliven topics you might typically find…well, dull.
Through the signature style that only Marketplace can deliver, we’re on a mission to raise the economic intelligence of the country—but we don’t do it alone. We count on listeners and readers like you to keep this public service free and accessible to all. Will you become a partner in our mission today?