Nation’s GDP grows at 3.2% rate in first quarter
The economy grew 3.2% in the first quarter of the year, the Commerce Department reported Friday, another indication a steady, though modest, recovery has taken hold.
The annualized rate of growth of the gross domestic product -- the nation’s total production of goods and services -- was down from the 5.6% rate of the last three months of 2009. But that had been expected as the effect of the federal government’s stimulus policies peaked during that period.
“We’re still running on the fumes of stimulus in the U.S. economy,” said Diane Swonk, chief economist at Mesirow Financial in Chicago. “It’s a recovery, but by any standard is still a muted recovery. But we’re thankful to have what we’ve got,” given the depth of the recession, she said.
The median forecast for first quarter GDP was 3.4%, according to a survey of economists by Thomson Reuters, and Friday’s figure fell below that. But that projection reflected more bullish sentiment about the economy in recent weeks. The National Assn. of Business Economics had forecast in February that first-quarter GDP would be 3%.
The GDP growth rate released Friday by the Commerce Department’s Bureau of Economic Analysis is only modest, but still is a dramatic improvement over the same period last year. At the bottom of the recession, the U.S. economy shrank 6.4% in the first quarter of 2009.
That was the low point for the deepest recession since the 1930s, which began in December 2007. Economic growth returned last summer when the third-quarter GDP increased at an annualized rate of 2.2%.
“I think its well in line with expectations,” Swonk said of the first-quarter figure. “The recovery’s more broad-based. Although the momentum slowed quite a bit from the fourth quarter, the consumer showed up and we had a lot of demand, which is good.”
The Bureau of Economic Analysis said growth was boosted in the first quarter by consumer spending. Real personal consumption expenditures increased 3.6%, compared with a 1.6% increase in the last three months of 2009.
Despite three straight quarters of economic growth, the recession still has not been declared officially over. The National Bureau of Economic Research, which determines the lengths of business cycles, said this month that it “would be premature” to set a date marking the end of the recession and the start of an economic expansion.
A major reason for that decision was the still-high unemployment rate.
Although job growth returned in March, with the economy creating 162,000 jobs, the national unemployment rate remained at 9.7%. The figure is higher in many states, including California, which reached a new high of 12.6% in March, tied for third-worst in the nation. The state trailed only Michigan’s 14.1% jobless rate and Nevada’s 13.4% figure, and was tied with Rhode Island.
“At the end of the day, none of this really matters unless we can get the employment machine going, which is coming, but very slowly,” Swonk said.