First-quarter GDP rises at a 3.2 percent rate driven by consumer spending
The U.S. economy grew at a 3.2 percent rate in the first quarter of this year, roughly in line with estimates.
The number, released this morning, is the government's first estimate of U.S. gross domestic product in the first three months of the year. A revised number, based on deeper data, will be released in coming weeks. The government will take two more iterations on the data.
GDP was driven by consumer spending in the first quarter, which was up 3.6 percent, the biggest jump since the first quarter of 2007.
U.S. GDP in the first quarter took a significant step back from the previous quarter, which was expected. In the fourth quarter of 2009, GDP expanded at a rate of 5.6 percent, but that was something of a one-time sugar-surge to the economy as a result of businesses rebuilding their inventory.
During the Great Recession, businesses slashed their inventory -- or what they keep on their shelves -- in order to reduce their costs. But businesses, sensing a recovery, began to build up their inventories in the fourth quarter of last year. That meant more orders to manufacturers to make more goods, and that sent GDP soaring.
But those inventory rebuilds are largely complete, and now the U.S. economy -- which is 70 percent based on consumer spending -- must lure people into stores to buy things.
Spending in the first quarter at the state and local level was down 3.8 percent, which highlights a continuing area of worry for the U.S. economy. Everyone knows how bad things are in California, which some have described as our Greece. But hundreds of state and local governments across the nation similarly are in deep financial trouble.
In healthy times, the U.S. economy grows at about a 5 percent annual clip, so the current number is still well below that. But it could be worse. We could be in Europe. Economists there were forecasting, at best, a 1 percent annual bump in GDP this year. And that was before the Greek debt crisis, which now appears to be spreading to other countries on the Continent and will doubtless affect GDP.
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April 30, 2010; 9:00 AM ET
| Tags: Business, Consumer spending, GDP, Good, Government, Gross domestic product, Inventory, United States, United States Economy, europe, greece debt crisis, greek debt
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