GDP = 1.3%
By now, you know the GDP came in way below consensus. Given recent revision history, its very likely this will not be the final number.
The economy slowed to its weakest pace of gains in 4 years, when GDP was 1.2% during Q1 2003.
Housing gets most of the blame (duh), but do not ignore the accelerating inflation factor as a key element. Most traders realize the Fed is watching that component closely; Hence, why you are not hearing the usual "Rate Cut" chants from the cheap seats. PCE rose 3.4% (it decreased 1.0% Q4) Even the nonsensival core PCE (ex food and energy) was plus 2.2% (following 1.8% Q4).
International trade, Business Capex spending, Inventory growth, and decreased government spending all weighed on the economy to produce that 1.3% number.
The one bright spot: Durable goods. Plus 7.3% in Q1 follows +4.4% in Q4. Pretty much everything else was punk.
Nice table via the WSJ:
GDP Component | Added (subtracted) from GDP (%) |
Residential fixed investment | (0.97) |
International trade | (0.52) |
Inventories | (0.30) |
Consumer spending | 2.66 |
Business spending | 0.21 |
Government spending | 0.18 |
Source: WSJ, Commerce Department |
Source:
U.S. Economic Growth Is Slowest In 4 Years Amid Housing Slump
JEFF BATER
WSJ, April 27, 2007 9:58
http://online.wsj.com/article/SB117767443639284710.html
Friday, April 27, 2007 | 11:00 AM | Permalink
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» Economy Slumps, Stagflation Watch Begins from TAM Money and Finance
The faltering housing market placed its stamp on the overall economy with the news that GDP slowed to 1.3% growth in the first quarter of 2007. The negative effects of the housing slump are understandable. What should concern is the possibility of stag... [Read More]
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Comments
Consumers are still spending like crazy? That leg looks solid on the outside but it's rotting on the inside.
Posted by: wunsacon | Apr 27, 2007 11:42:34 AM
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