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