Consumer Spending, Inventories Push 1Q Growth to 3.2%

ShoppingWith solid boosts from consumer spending and private business inventories, the Commerce Department reported 3.2 percent  first-quarter growth in the gross domestic product (GDP), the primary indicator of the economy’s overall recovery.
Although it was weaker than the fourth quarter’s 5.6 percent growth, the first-quarter increase marked the third consecutive quarter in the positive.
It also signals a sustainable recovery from the deepest recession since the Great Depression of the 1930s.
Whether with their credit cards or cash, consumers drove the economic engine in the first quarter. Consumer spending increased by 3.6 percent, the biggest surge since early 2007..
But private businesses did they share as well. Businesses increased inventories $31.1 billion in the first quarter, following decreases of $19.7 billion in the fourth quarter and $139.2 billion in the third.
Spending by businesses on equipment and software increased 13.4 percent, compared with an increase of 19.0 percent in the fourth quarter.
Real imports and exports of goods and services did well, but lagged behind the fourth quarter figures.  Exports increased 5.8 percent in the first quarter, compared with an increase of 22.8 percent in the fourth quarter. Imports increased 8.9 percent, compared with an increase of 15.8 percent.
The higher percentage for imports reflects stronger demand for goods by U.S. consumers.
Commercial and resident real estate investments are still putting downward pressures on the economy, according to the first-quarter figures.
Commercial real estate project investments decreased 14 percent, compared with a decrease of 18 percent in the fourth quarter, the seventh consecutives quarterly decrease. Investments on residential projects fell 10.9 percent, compared to an increase of 3.8 percent in the fourth quarter.

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