Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

US GDP drops to 2.2% in Q1
Hotair ^ | 04/27/2012 | Ed Morrissey

Posted on 04/27/2012 6:34:25 AM PDT by SeekAndFind

The US economy slowed in the first quarter of the year, dropping from the previous quarter’s 3.0% to 2.2%, according to the latest report from the Department of Commerce:

Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 2.2 percent in the first quarter of 2012 (that is, from the fourth quarter to the first quarter), according to the “advance” estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2011, real GDP increased 3.0 percent.

The Bureau emphasized that the first-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency (see the box on page 3). The “second” estimate for the first quarter, based on more complete data, will be released on May 31, 2012.

The increase in real GDP in the first quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, private inventory investment, and residential fixed investment that were partly offset by negative contributions from federal government spending, nonresidential fixed investment, and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased.

The deceleration in real GDP in the first quarter primarily reflected a deceleration in private inventory investment and a downturn in nonresidential fixed investment that were partly offset by accelerations in PCE and in exports.

Gross domestic purchases dropped even farther in Q1, from 3.1% in the previous period to 2.1%. That demand fell even as current-dollar personal income rose 3.7% and disposable personal income increased 2.8%, both improvements over the previous quarter. One explanation would probably be the rapid increase in gas prices, which ate away at disposable income, but nervousness over the economy probably also played some part.

Don’t expect too much from next quarter, either. More than a quarter of the growth seen in Q1 can be attributable to inventory expansion. Real final sales of domestic product, which excludes inventory expansion, only grew 1.6%, an improvement over 2011Q4′s 1.1% but still weak and indicative that demand isn’t keeping pace with production. That will force discounting in future quarters to clear ever-increasing inventories, cutting into profits and weakening the job market even further.

Update: Not even Reuters can make this one look good, calling it “tepid” and noting that it missed expectations:

U.S. economic growth cooled in the first quarter as businesses cut back on investment and restocked shelves at a moderate pace, but stronger demand for automobiles softened the blow.

Gross domestic product expanded at a 2.2 percent annual rate, the Commerce Department said on Friday in its advance estimate, moderating from the fourth quarter’s 3 percent rate.

While that was below economists’ expectations for a 2.5 percent pace, a surge in consumer spending took some of the sting from the report. However, growth was still stronger than analysts’ predictions early in the quarter for an expansion below 1.5 percent.

Although the details were mixed, the GDP report offered a somewhat better picture of growth compared with the fourth quarter, when inventory building accounted for nearly two thirds of the economy’s growth. In the first quarter, demand from consumers took up the slack.

Actually, that last assertion is wrong. If it were true, real final sales of domestic product would have equaled or surpassed the overall GDP number, and the growth in gross domestic purchases dropped by a third from last quarter. I’m not sure what report Reuters was reading, but consumers didn’t “take up the slack.” Inventory expansion still accounts for a quarter of the growth in the opening GDP period this year.

Politically speaking, this makes the White House’s “we’re on the right track” argument a little more difficult to make. A 2.2% GDP rate won’t be a disaster on the stump, but the trend is going once again towards another Stagnant Spring. If it gets revised downward in the next two months, Obama will have a tough time talking about the economy. Expect a lot of discussion of dog carriers and condoms in the weeks ahead.


TOPICS: Business/Economy; Culture/Society; Front Page News
KEYWORDS: gdp; obamanomics; recovery; unexpected

1 posted on 04/27/2012 6:34:27 AM PDT by SeekAndFind
[ Post Reply | Private Reply | View Replies]

To: SeekAndFind

Everyone is running around this morning surprised at how low this figure is. I am surprised at how high it is.


2 posted on 04/27/2012 6:39:00 AM PDT by Lazlo in PA (Now living in a newly minted Red State.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

WTF? We’re boomin, aren’t we? I hear every week we have more private sector jobs and less applications for unemployment (good Democrats don’t believe the rumors about lying statistics, etc.)

I mean at least one of the dealers in my town (Ford) has its lot more than half full (the other GM and Chrysler dealers are about 20% full). There’s not too many store fronts still vacant - and that new KFC from a year ago didn’t close because of the economy - it shut because we don’t have enough chickens here in North Georgia - yeah, that’s the ticket.....

GDP down? Nope, it’s them damned Republicans who ain’t got Obama’s back lying about it. Damned racists.


3 posted on 04/27/2012 6:39:42 AM PDT by Gaffer
[ Post Reply | Private Reply | To 1 | View Replies]

To: Lazlo in PA

Everyone is running around this morning surprised at how low this figure is. I am surprised at how high it is.
_____________

Lol, Lazlo...I thought the exact same thing.

Any chance you want to wager it gets revised down next quarter?


4 posted on 04/27/2012 6:41:38 AM PDT by Tulane
[ Post Reply | Private Reply | To 2 | View Replies]

To: Lazlo in PA

At this point in time when Reagan took over ( after the Carter recession ), the US GDP was growing by above 4%.

Same was true of Bush 43 after the DOT COM bubble recession and the 9/11 attacks.

That is what we should be aiming for if we want unemployment to fall significantly below 7%.


5 posted on 04/27/2012 6:43:34 AM PDT by SeekAndFind
[ Post Reply | Private Reply | To 2 | View Replies]

To: Gaffer

According to the ‘rats, if the economy is still down, it’s due to Bush’s policies,
and only when it starts to get better can we say that 0bama’s policies are having an effect.


6 posted on 04/27/2012 6:43:57 AM PDT by MrB (The difference between a Humanist and a Satanist - the latter knows whom he's working for)
[ Post Reply | Private Reply | To 3 | View Replies]

To: MrB

PIMCO’s (World’s largest bond fund manager) Bill Gross spent a longer-than-soundbite period discussing QE3, the chance of a US double-dip, and Europe’s ongoing dysfunction with Trish Regan on Bloomberg Television this afternoon.

Given more than his typically limited-to-ten-second thoughts some other media outlets appear to prefer, the old-new-normal-bond-king believes the Fed will resist another round of quantitative easing in the short-term but “if unemployment begins to rise for two-to-three months then QE3 is back on”.

Noting that investors should focus on nominal GDP growth, he goes on to dismiss the idea that the US can decouple from a troubled Europe pointing the political dysfunction between the Germans and the rest as greater than the polarity between Democrats and Republicans here at home.


7 posted on 04/27/2012 6:46:53 AM PDT by SeekAndFind
[ Post Reply | Private Reply | To 6 | View Replies]

To: MrB

And, Obama’s ‘policies’ won’t start having an effect until he’s re-elected, huh?


8 posted on 04/27/2012 6:48:11 AM PDT by Gaffer
[ Post Reply | Private Reply | To 6 | View Replies]

To: SeekAndFind

WORST .... RECOVERY ... EVER.


9 posted on 04/27/2012 6:50:28 AM PDT by Uncle Miltie (FOCUS ON FACTS: 0bamaCare Hated. Worst Recovery. Failed Stimulus. Worst Deficits.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Gaffer

Well, obviously, if the economy isn’t recovering,
we haven’t given 0bama’s policies enough time to take effect - “it was worse than we thought and will therefore take more time”.


10 posted on 04/27/2012 6:51:17 AM PDT by MrB (The difference between a Humanist and a Satanist - the latter knows whom he's working for)
[ Post Reply | Private Reply | To 8 | View Replies]

To: SeekAndFind

Fear not! “Recovery Summer II” will be coming soon.


11 posted on 04/27/2012 6:51:51 AM PDT by Senator_Blutarski
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind
"Not even Reuters can make this one look good, calling it “tepid” and noting that it missed expectations"

Unexpected! Drink!

12 posted on 04/27/2012 6:52:57 AM PDT by Uncle Miltie (FOCUS ON FACTS: 0bamaCare Hated. Worst Recovery. Failed Stimulus. Worst Deficits.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind


BUSH!!!!!
13 posted on 04/27/2012 6:53:19 AM PDT by VanDeKoik (If case you are wondering, I'm STILL supporting Newt.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: MrB

If he wins, expect the government to move forward, full-thrust with a one-time assessment against private 401Ks, 403Bs, IRAs, Roth IRAs, etc. to draw down the public debt.

He won’t, repeat won’t cut any of the vote-buying programs, period. Not EVER. Since he can’t sell enough T-bills to buyers (other than his own Fed), the largest single source of funds left are the funds. He will decimate them. Democrats have been lusting after them since Clinton - he’s just arrogant enough to take them by edict...all powerful Messian Obama....


14 posted on 04/27/2012 6:55:57 AM PDT by Gaffer
[ Post Reply | Private Reply | To 10 | View Replies]

To: Lazlo in PA

—Everyone is running around this morning surprised at how low this figure is. I am surprised at how high it is.—

I’m not. It’s based on ginned math.

Ever seen this:
http://www.youtube.com/watch?v=zPkTItOXuN0

Go to 8:40 if you don’t want to watch the whole thing. It’s very enlightening, regarding how they calculate GDP.

It’s a fantasy number.


15 posted on 04/27/2012 6:56:40 AM PDT by cuban leaf (Were doomed! Details at eleven.)
[ Post Reply | Private Reply | To 2 | View Replies]

To: SeekAndFind

Obama is probably headed out to the golf course today thinking, “we’re right on track.”


16 posted on 04/27/2012 6:56:44 AM PDT by OrioleFan (Republicans believe every day is July 4th, Democrats believe every day is April 15th.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

Just the deficit spending is 10% of the US economy. IF you subtract deficit spending the GDP is really negative 8%!!!!


17 posted on 04/27/2012 6:56:52 AM PDT by central_va ( I won't be reconstructed and I do not give a damn.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Lazlo in PA

It must be easier to fake employment numbers than it is to fake the GDP. Great Leader needs a Czar to help remeasure GDP.


18 posted on 04/27/2012 6:58:23 AM PDT by AD from SpringBay (We deserve the government we allow.)
[ Post Reply | Private Reply | To 2 | View Replies]

To: Uncle Miltie

RE: Unexpected! Drink!

Congrats for being the first person to use the word in this thread.


19 posted on 04/27/2012 6:59:05 AM PDT by SeekAndFind
[ Post Reply | Private Reply | To 12 | View Replies]

To: Gaffer

His driving force is vengeance on the “colonialist” American capitalist system.
It’s not really about vote buying, it’s about revenge and reparations.


20 posted on 04/27/2012 6:59:34 AM PDT by MrB (The difference between a Humanist and a Satanist - the latter knows whom he's working for)
[ Post Reply | Private Reply | To 14 | View Replies]

To: MrB

I agree that’s his end motive, but he needs to keep the structure in place to get the votes to finally secure his power... I have no doubt that once he does this, he’ll change tack and go openly about what he’s really intending i.e., the revenge and reparations you describe...until then, he has to keep the means to his power viable.


21 posted on 04/27/2012 7:01:49 AM PDT by Gaffer
[ Post Reply | Private Reply | To 20 | View Replies]

To: Lazlo in PA
Agreed. Months, even years ago, I sensed good things for '12 because Obie's policies could not, would not succeed. They just needed time to ripen, and fall apart during campaign season. I'm breathing easier every week as another leg of the Obama administration crumbles.

And the farm child labor provisions--though withdrawn--serve a purpose to demonstrate what could be ahead.

SC decisions, Fast and Furious.....lots more to crumble.

22 posted on 04/27/2012 7:03:54 AM PDT by chiller (Elect another batch of TPartiers and it won't matter which R we elect. WE will lead.)
[ Post Reply | Private Reply | To 2 | View Replies]

To: MrB

According to the ‘rats, if the economy is still down, it’s due to Bush’s policies,
and only when it starts to get better can we say that 0bama’s policies are having an effect.


The Rats will never admit that Clinton enjoyed an economy that was still running on Ronald Reagan’s coat tails.


23 posted on 04/27/2012 7:04:53 AM PDT by unkus (Silence Is Consent)
[ Post Reply | Private Reply | To 6 | View Replies]

To: central_va

Add in all the campaign spending and it is even worse.


24 posted on 04/27/2012 7:05:01 AM PDT by csmusaret (I have kleptomania, but when it gets too bad I take something.)
[ Post Reply | Private Reply | To 17 | View Replies]

To: SeekAndFind

Whoever, wants 4 more years of this regime is insane.


25 posted on 04/27/2012 7:06:19 AM PDT by erod (This Chicagoan will crawl over broken glass to vote the fake Chicagoan Obama out!)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind
At this point in time when Reagan took over ( after the Carter recession ), the US GDP was growing by above 4%.

Your being modest. GDP growth was 7.3% in Q1 1984. The average over the Reagan years was 4.3%. Let's also remember that oil prices dropped significantly as well for an extended period after Reagan took office.

26 posted on 04/27/2012 7:06:55 AM PDT by Lazlo in PA (Now living in a newly minted Red State.)
[ Post Reply | Private Reply | To 5 | View Replies]

To: Lazlo in PA

I figure that it will be “unexpectedly” revised downward on May 31.


27 posted on 04/27/2012 7:07:36 AM PDT by tiki
[ Post Reply | Private Reply | To 2 | View Replies]

To: Lazlo in PA

This.

“Everyone is running around this morning surprised at how low this figure is. I am surprised at how high it is.”


28 posted on 04/27/2012 7:07:42 AM PDT by GOPRaleigh (Unexpected)
[ Post Reply | Private Reply | To 2 | View Replies]

To: MrB

Well, obviously, if the economy isn’t recovering,
we haven’t given 0bama’s policies enough time to take effect - “it was worse than we thought and will therefore take more time”.


Yep. Like the old Communist ‘Five Year plans’.

This will be the 4th ‘Summer of Recovery’.


29 posted on 04/27/2012 7:07:59 AM PDT by unkus (Silence Is Consent)
[ Post Reply | Private Reply | To 10 | View Replies]

To: SeekAndFind

During the Reagan administration, the American economy went from a GDP growth of -0.3% in 1980 to 4.1% in 1988 (in constant 2005 dollars), which reduced the unemployment rate by 1.6%, from 7.1% in 1980 to 5.5% in 1988

http://en.wikipedia.org/wiki/Reaganomics


30 posted on 04/27/2012 7:30:16 AM PDT by kcvl
[ Post Reply | Private Reply | To 5 | View Replies]

To: cuban leaf
A good approximation of the GDP adjusted by an inflation rate that has not been subjected to enhancements that suppress inflation. Note: government spending has not been removed.


31 posted on 04/27/2012 7:41:15 AM PDT by khelus
[ Post Reply | Private Reply | To 15 | View Replies]

To: SeekAndFind

“but stronger demand for automobiles softened the blow.”

Pretty damn easy to sell new cars when Government-owned Ally Bank is financing 450 Score Credit Criminals on Government Motors cars, to boost Obama’s econ numbers.

And remember, Government-owned Ally Bank FAILED it’s stress test recently.
I can’t IMAGINE why, can you?

Yeah, this is how it works in a fascist, centrally-planned economy, folks. YOU will get stuck with the bill.


32 posted on 04/27/2012 8:08:01 AM PDT by tcrlaf (Election 2012: THE RAPTURE OF THE DEMOCRATS)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Uncle Miltie

“Unexpected! Drink!”

UNEXPECTEDLY UNEXPECTED!!!!


33 posted on 04/27/2012 8:23:34 AM PDT by tcrlaf (Election 2012: THE RAPTURE OF THE DEMOCRATS)
[ Post Reply | Private Reply | To 12 | View Replies]

To: VanDeKoik
that's just toooo damn funny...
34 posted on 04/27/2012 4:41:19 PM PDT by Chode (American Hedonist - *DTOM* -ww- NO Pity for the LAZY)
[ Post Reply | Private Reply | To 13 | View Replies]

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson