US consumer spending rises
Source: Agencies |
May 1, 2010, Saturday
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Print Edition
Print Edition
THE United States economy grew at a slightly slower-than-expected pace in the first quarter, held back by inventories and exports, but resurgent consumer spending offered evidence of a sustainable recovery, according to a government report released yesterday.
Gross domestic product expanded at a pace of 3.2 percent, the US Commerce Department said in its first estimate -- marking three straight quarters of growth as the economy climbs out of the worst recession since the 1930s.
Analysts had forecast GDP, which measures total goods and services output within US borders, growing at a 3.4 percent rate in the first three months of 2010 after a 5.6 percent growth pace in the fourth quarter.
Despite the slowdown from the prior quarter, details of the report were fairly upbeat, with consumer spending accelerating at a 3.6 percent rate, more than double the 1.6 percent pace in the fourth quarter. The first-quarter rise was the largest since the first quarter of 2007.
Consumer spending, which normally accounts for 70 percent of US economic activity, added 2.55 percentage points to GDP last quarter, the biggest percentage contribution since the fourth quarter of 2006.
Business inventories increased US$31.1 billion in the first quarter as businesses restocked to meet firming domestic demand, the first increase since the first quarter of 2008. Inventories contributed 1.57 percentage points to GDP, less than half the contribution in the last three months of 2009 when businesses became less aggressive in clearing their warehouses.
When businesses slow the rate at which they are liquidating inventories, manufacturers raise production and this boosts GDP. Inventories fell US$19.7 billion in the last quarter of 2009. Excluding inventories, the economy expanded at a 1.6 percent rate following a 1.7 percent pace in the fourth quarter.
Businesses continued to spend on software and equipment, though less vigorously than in the prior quarter. Business investment rose at a 4.1 percent rate after a 5.3 percent pace in the fourth quarter.
Export growth slowed sharply to a 5.8 percent pace in the first quarter from a 22.8 percent rate in the prior period, while imports rose at an 8.9 percent rate.
Gross domestic product expanded at a pace of 3.2 percent, the US Commerce Department said in its first estimate -- marking three straight quarters of growth as the economy climbs out of the worst recession since the 1930s.
Analysts had forecast GDP, which measures total goods and services output within US borders, growing at a 3.4 percent rate in the first three months of 2010 after a 5.6 percent growth pace in the fourth quarter.
Despite the slowdown from the prior quarter, details of the report were fairly upbeat, with consumer spending accelerating at a 3.6 percent rate, more than double the 1.6 percent pace in the fourth quarter. The first-quarter rise was the largest since the first quarter of 2007.
Consumer spending, which normally accounts for 70 percent of US economic activity, added 2.55 percentage points to GDP last quarter, the biggest percentage contribution since the fourth quarter of 2006.
Business inventories increased US$31.1 billion in the first quarter as businesses restocked to meet firming domestic demand, the first increase since the first quarter of 2008. Inventories contributed 1.57 percentage points to GDP, less than half the contribution in the last three months of 2009 when businesses became less aggressive in clearing their warehouses.
When businesses slow the rate at which they are liquidating inventories, manufacturers raise production and this boosts GDP. Inventories fell US$19.7 billion in the last quarter of 2009. Excluding inventories, the economy expanded at a 1.6 percent rate following a 1.7 percent pace in the fourth quarter.
Businesses continued to spend on software and equipment, though less vigorously than in the prior quarter. Business investment rose at a 4.1 percent rate after a 5.3 percent pace in the fourth quarter.
Export growth slowed sharply to a 5.8 percent pace in the first quarter from a 22.8 percent rate in the prior period, while imports rose at an 8.9 percent rate.
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