The first of three readings for 1Q2012 GDP was +2.2%.
This is seasonally adjusted and inflation adjusted. This advance estimate uses 3 months of data for consumer spending but only 2 months of data and one month of estimates for the other components of GDP: investments, government spending, imports and exports.
Real personal consumption expenditures increased 2.9 percent in the first quarter, compared with an increase of 2.1 percent in the fourth. Real nonresidential fixed investment decreased 2.1 percent in the first quarter, in contrast to an increase of 5.2 percent in the fourth. Real exports of goods and services increased 5.4 percent in the first quarter, compared with an increase of 2.7 percent in the fourth. Real imports of goods and services increased 4.3 percent, compared with an increase of 3.7 percent.
In short, mainly the consumer drove GDP gain. The decrease in inventories on the supply side was a correction to a too aggressive buildup in 4Q2011.
The big picture is that having spent so much on “stimulus” and having taken in so much less in taxes (which left more for consumers to spend) this is a weak gain in GDP for being this far into recovery. There is no mystery. The collapse of the housing bubble resulted in significant losses to the banking sector followed by caution. It also left a large number of people with negative equity in their homes. That and the loss of jobs created by the liquidity crisis is making this recovery much more lengthy than a typical cyclical recovery.
The only good news is that the consumer is driving GDP. When all is said and done, that is what is most important. This increase in consumer spending offsets much of the gloom on the headline number but unless jobs pick up (the last jobs report was disappointing) the increase in consumer spending will abate.
We continue to increase national debt at a pace much faster than GDP growth and refuse to address entitlement spending. National Debt in the first quarter increased by $359,138,635,737.60 which was an increase of 2.30% for the quarter. The GDP increase is annual. On the surface, debt is increasing at more than four times the rate of increase in GDP. This is not a formula for success.
– Full 1Q2012 GDP report
– Primer on GDP Analysis
Also, here are two other reports released today:
Employment Cost Index
– ECI, Quarter/Quarter +0.4%
– This is the cost of labor: wages and benefits.
University of Michigan Consumer Sentiment (April 2012)
– Level is 76.4 up from 75.7.
– This is in keeping with the internals of GDP. The consumer is increasing spending.