The U.S. economy grew 0.2 percent in the first quarter, well below analyst consensus. The fairly typical excuses followed the release, from weather to port strikes, to the first quarter growth curse that has stifled Q1 numbers since the financial crisis.

The Fed even brushed off the numbers as a consequence of “transitory factors.”

Most consensus economists side with the Fed, expecting robust growth to reappear as we head toward 2016.

Should that be the case, the Fed will feel emboldened to raise rates as they have projected. If they do, of course, the U.S. dollar will continue its path even higher.

Paradoxically, a closer look at the report reveals that the storm that shocked the U.S. economy actually swept in from the currency markets. Is the Fed to blame for lame GDP?

The Dollar Cost

The dollar has climbed 25 percent over the last 9 months, forcing a 25 percent pricing disadvantage on American exporters. Exports declined by 7 percent on an annualized basis in the first quarter, while higher U.S. purchasing power led to a 2 percent gain in imports.

Taken together, trade deducted 1.25 percent from Q1 GDP. A stronger dollar weakened our trade position.

Oil prices, inversely correlated to the U.S. dollar, declined 50 percent over the last 12 months. Prior to the decline in oil prices, the best American economic story was the reinvigoration of our onshore energy production.

Of course, the viability of energy investment projects shifted a bit when the underlying commodity collapsed in price.

As such, Q1 domestic investment in fixed structures fell 23 percent as mining and drilling projects froze, subtracting nearly a full percentage point from Q1 growth. A stronger dollar weakened fixed investments.

The Dollar Benefit

The sharp decline in oil prices should benefit consumers. Accordingly, consumer spending added 1.3 percent to first-quarter growth. This was helpful, but not enough to overcome the deductions from trade and investment.

Declining import prices also encourage inventory stockpiling, which added 0.74 percent to GDP.

Arguably, this component alone accounts for the positive Q1 figure and will reverse as selves clear.

Subtracting the inventory build computes a more meaningful gauge of real economic activity, the final sales number, which declined 0.5 percent for the quarter after rising 2.3 percent in Q4.

The Verdict

The Fed made a mistake in projecting timetables for rate hikes while professing to be data dependent.

By broadcasting their desire to hike rates “about six months after the end of QE,” they forced the dollar higher reflexively and prematurely.

As Q1 earnings and GDP reports demonstrate, the stronger dollar has reduced earnings, economic growth and inflation expectations ... just as an increase in interest rates would do.

The Fed need not compound the problem further by amplifying punitive dollar strength through faulty rate hike timetables or rate hikes themselves.

Fire when you see the white of inflation’s eyes. Otherwise, keep your Fed heads down.

David Waddell is president and CEO of Memphis-based Waddell & Associates.