Friday, April 30, 2010

GDP Growth Slows in Q1: Back to Reliance on the Consumer

Marketwatch details:

U.S. consumer spending rose at the fastest rate in three years in the first quarter of 2010, powering the economy to a 3.2% growth rate, the Commerce Department estimated Friday.

The 3.2% increase in real seasonally adjusted gross domestic product was exactly as expected by economists surveyed by MarketWatch. See our complete economic calendar and consensus forecast.

GDP is up 2.5% in the past year, following the worst downturn in generations. GDP rose at a 5.6% pace in the fourth quarter, primarily because of inventory reductions.

In the first quarter, by contrast, private domestic demand was the main engine of growth. Consumer spending rose at a 3.6% annual rate, while business investments in equipment and software increased at 13.4% pace.


So we're back to relying on an extended consumer for economic growth... nothing changes.

Source: BEA

6 comments:

  1. SPECTRE of DeflationApril 30, 2010 at 6:33 AM

    We are screwed. That is the change. We can no longer carry two thirds of our economy on the backs of consumers. In fact, consumers are still taking daily hits to their balance sheets. Debt to income of better than 100%, and as high as 135%, says that the thieves in DC are completely insane if they think consumers can lift all boats in this debt saturated environment. Did we learn nothing at all from history?

    ReplyDelete
  2. household's financial assets of their disponsible incomes :
    EuroZone(230%)..US(380%)..Jap(460%)..

    househlod's gross debts of their disponsible incomes :
    EuroZone(93%)..US(130%)..Jap(103%)..

    ReplyDelete
  3. SPECTRE of DeflationApril 30, 2010 at 11:13 AM

    geo, I believe the first stats you present are in fact both public and private debt to GDP for the countries you mentioned. During the Depression we were never higher than 270% of GDP.

    The second set of numbers are indeed debt to DPI which clearly shows how overleveraged the consumer still is. How exactly do consumers come back when they hit the debt saturation wall and have no pricing power in the jobs market? We will also lose the Tax Cuts after this calender year. That should do wonders for consumer spending.

    I will never forget the first Bush's tax increases on luxury items. It damn near bankrupted multiple companies until the goofballs of DC caught a clue. Bring on more bread and circus.

    ReplyDelete
  4. spectre ! i agree with you -100%
    in US's present economic condition,the budgetry process has no rooms for the taxes ! very problematic..the taxes'systematics are not resilient..one of the reasons is that the Economic System has heavy borrowed household sector right now ...!

    ReplyDelete
  5. spectre..
    geo's first statsc.set is about that
    the household's asset ( bubble) market values of their disposible -total-incomes percentage.. not their debts !!!!!
    this does'nt mean that these assets have real effective values.

    ReplyDelete
  6. ves,you are very correct ~~
    these are not [debts(liability)]...

    their assets-total -market values are not real anyway ..
    notable part of them are imaginary
    and not convertible..~~

    ReplyDelete