Thanks to consumers, U.S. economy still growing

Reasons to be happy and sad about the first quarter GDP report

By Andrew Leonard
April 30, 2010 6:43PM (UTC)
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FILE - In this April 21, 2010 file photo, a line of 2010 Ford F-150 pickup trucks is seen at the Formula Ford dealership in Montpelier, Vt. Ford Motor Co. said Tuesday, April 27, it earned $2.1 billion in the first quarter, another sign the economy is improving as people spend more on big-ticket items like cars. (AP Photo/Toby Talbot, file) (AP)

Warren Buffett says the U.S. economy is finally beginning to show signs of significant growth. On Friday, the U.S. government partially confirmed his analysis, reporting that consumer spending pushed  GDP growth forward at a more-or-less expected 3.2 percent annual rate in the first quarter of 2010

Reasons to be happy:

  • Consumer spending rose at a brisk 3.6 percent over the previous quarter, the fastest rate in three years.
  • Business investment rose at a very healthy 13.4 percent
  • Inflation was essentially nonexistent, growing at the slowest pace on record.
  • Combined with the fourth quarter's 5.6 percent growth rate, notes Bloomberg, the U.S. economy has experienced "the biggest six-month gain since 2003."

Reasons to be sad:

  • Residential investment -- new home construction -- fell sharply, at an 11 percent rate. As Calculated Risk warns, that is "not a good sign for a robust recovery in 2010," since residential investment is usually one of first parts of the economy to recover after a recession.
  • Spending by state and local governments fell by 3.8 percent, the worst performance in almost 30 years.
  • Significantly faster growth will be necessary to make any real dent in unemployment.

Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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