U.S. economy shrank in first quarter, but don't panic

CNN

Thank goodness spring is here. Winter really wore down the U.S. economy.

America's economic growth was actually negative in the first three months of 2015. Gross domestic product, the widest measure of growth, fell -0.7%, according to revised government data out Friday.

Blame the cold weather, the strong U.S. dollar and West Coast port strike -- remember that -- for the weak start to the year. The strong dollar is making American exports look very expensive to people in other countries.

"This was not a good picture of the U.S. economy but it is all history," Jennifer Lee, senior economist at BMO Capital Markets, wrote in a note to clients. "We are seeing signs that the economy is recovering from the weak first quarter."

The same winter blip happened last year. The U.S. economy actually contracted by -2.1% in the first quarter of 2014, but the economy came surging back as the weather improved. Many experts believe America is in for a repeat: a slow start in the winter followed by a spring and summer rally.

Related: Maybe the U.S. economy isn't tanking after all

Rebound underway: The U.S. economy is already showing signs of life. Housing starts -- the pulse of American real estate -- had its best monthly gain since 1991 in April. Consumer confidence ticked up a bit recently and orders for durable goods -- refrigerators, for example -- jumped up too. People tend not to buy big ticket items unless they are optimistic about where their finances are headed.

Hiring is also strong. The economy added a healthy 223,000 jobs in April, a reassuring sign after March saw few job gains.

The government's initial estimate of first quarter economic growth, published a month ago, was a disappointing 0.2%. But even that projection was too optimistic. The government typically revises the data as it get more accurate information.

Although the first quarter is long gone, it is a big deal to the Federal Reserve, which is trying to decide if the economy is strong economy to raise interest rates soon. The negative economic growth means a June rate hike is almost certainly not going to happen. Many experts believe the Fed is prepping for a September rate hike.

Related: Yellen: Fed can't risk 'overheating the economy'

Friday's GDP revision comes on the heels of a major development for economic nerds (this reporter included). The Commerce Department announced last week that it will alter how it calculates GDP starting with the second quarter.

The adjustments are intended to remove more "residual seasonality." It's a wonky way of saying they will try to better account for things that happen during certain parts of the year. For example, federal government defense spending tends to be higher in the spring and summer than fall and winter.

There have been concerns that the government has underestimated winter GDP for many years -- yet another reason experts aren't panicking about a weak start to the year.