The U.S. Economy expanded in the first quarter of this year according to U.S. Department of Commerce. In its advanced estimate of first quarter activity, U.S. Gross Domestic Product advanced by 3.2 percent, which was below consensus forecast of 3.3 percent. Despite the increase, GDP decelerated as the forth quarter increase was higher at 5.6 percent.
The Commerce Department stated:
“The slower growth of GDP mainly reflected a slowdown in inventory investment. While businesses built up inventories after seven straight quarters of drawdowns, the change in inventories compared with the previous quarter was smaller, resulting in a smaller contribution to GDP. In addition, exports decelerated, residential housing turned down, and business investment in equipment and software slowed.
The contributions to the deceleration in GDP growth were partly offset by a strong pickup in consumer spending, especially for durable goods and services.”
Personal Spending increased 3.6 percent, which was above economists’ surveys of 3.3 percent and an improvement from the prior quarter’s reading of 1.6 percent.
The increase in consumer spending, which represents about 70 percent of the economy, does not appear to be a result of wage growth. Given that the unemployment rates remained at 9.7 percent all throughout the quarter, spending came from people’s savngs account which declined.
The report stated that:
“Real disposable personal income—income adjusted for inflation and taxes—was unchanged after increasing 1.0 percent.”
“The personal saving rate—personal saving as a percent of disposable personable income—was 3.1 percent in the first quarter, compared with 3.9 percent in the fourth quarter.”
Next week, we have both the manufacturing sector data releases as well as employment market numbers, which should give further insight on the the sustainability of the recovery. Stay tuned.
Read the full press release here.
Posted by Rom on 