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Economy in Brief

U.S. GDP Growth Slows
by Tom Moeller  April 28, 2011

Real GDP grew 1.8% (SAAR) last quarter, the weakest growth since Q2'10. The Q1 figure roughly equaled Consensus expectations for 1.9% growth.

Weakness in last quarter's GDP components was widespread. Slower growth in personal consumption of 2.7% from Q4 led the easing, although it still exceeded that for all of last year. Notable was weaker growth in business fixed investment to 1.8%, down from last year's 5.7% advance. Continuing weak was the housing sector. Residential investment fell 4.1%, on a par with last year's decline. Finally, government spending declined at a 5.2% rate, the most for any quarter since 1983. Lower defense purchases caused federal spending to fall at a 7.9% rate while budget shortfalls pulled state & local spending down at a 3.3% rate, the most in a year.

Deterioration in the foreign trade deficit subtracted 0.1 percentage points from last quarter's GDP gain, though export growth of 5.0% (7.3% y/y) exceeded the 4.4% rise (9.2% y/y) in imports. Quicker inventory accumulation added 0.9 percentage points to GDP growth. 

Price inflation as measured by the chained GDP price index quickened to 1.9%, nearly double last year's gain. The price index for domestic final demand jumped 3.8% (1.6% y/y) and the price index for final sales rose 1.9% (1.5% y/y). The GDP figures are available in Haver's USECON and USNA databases and the expectations number is in AS1REPNA.

Chained 2005 $, % AR Q1'11 Q4'10 Q3'10 Q1'11
Y/Y
2010 2009 2008
GDP 1.8 3.1 2.6 2.3 2.9 -2.6 -0.0
 Inventory Effect 0.9 -3.4 1.6 0.1 1.5 -0.5 -0.5
Final Sales 0.8 6.7 0.9 2.3 1.4 -2.1 0.5
 Foreign Trade Effect -0.1 3.3 -1.7 -0.4 -0.5 1.0 -1.1
Domestic Final Demand 0.9 3.2 2.6 2.7 1.8 -3.1 -0.6
Demand Components
Personal Consumption 2.7 4.0 2.4 2.8 1.8 -1.2 -0.3
Business Fixed Investment 1.8 7.7 10.0 9.0 5.7 -17.1 0.3
Residential Investment -4.1 3.3 -27.3 -2.5 -3.0 -22.9 -24.0
Government Spending -5.2 -1.7 3.9 0.2 1.0 1.6 2.8
Prices
Chained GDP Price Index 1.9 0.4 2.1 1.6 1.0 0.9 2.2
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