Home » Headline News 
Apr. 29, 2013

Economy Watch: Modest Growth in 1Q, But at Least Its Growth

By Dees Stribling, Contributing Editor

U.S. GDP starting expanding again during the first quarter of 2013 for a number of reasons, according to the Bureau of Economic Analysis on Friday, which put the annualized rate at 2.5 percent, compared with an anemic 0.4 percent during the last quarter of 2012. A number of factors helped drive the increase for the quarter, but not enough to make growth more robust.

Personal consumption expenditures, which is government terminology for people shopping and otherwise spending on needs and wants, was at an annualized 3.2 percent rate, an increase from the fourth quarter’s 1.8 percent. Residential investment—people buying houses—was up in the first quarter, though not quite as much as in the fourth (12.6 percent vs. 17.6 percent). Exports were up, but that growth was cancelled out by imports, which were up as well.

The BEA also reported that U.S. disposable personal income decreased $136.3 billion (4.4 percent) in the first quarter, compared with an increase of $228 billion (7.9 percent) in the fourth. Though that seems like a wide swing, in fact much of the difference was income being taken before Dec. 31 rather than afterward, to take advantage of lower 2012 tax rates.

Consumer sentiment edges down

U.S. consumer sentiment dropped between March and April, according to the Reuter’s/University of Michigan’s consumer sentiment index, down from 78.6 to 76.4. Consumers might still be worried about growth prospects for the economy, but the end-April sentiment level could have been worse, considering that the mid-month reading was 72.3. Perhaps the recent drop in the price of gas has been helping to pep up some consumers.

The current conditions index rose more than five points from mid-month, coming in at the end of April at 89.9, which is still a little less than end-March’s 90.7. The expectations index also was up from mid-month, ending at 67.8, but it didn’t match end-March levels either, when the reading was 70.8. Consumers expect inflation to be more-or-less flat over the next year.

On the whole, consumer sentiment is still low this year compared with late 2012, but relatively high compared with most post-recession periods. For most of 2010 and ’11, for example, the index rarely peeped above 70, and at one point—in the summer of 2011, which was the summer of the looming U.S. default—consumer sentiment was actually down in the troughs associated with the panic and recession of 2008 and ’09, that is, an index reading below 60.

Wall Street ended the day on Friday mixed, but roughly where it started. The Dow Jones Industrial Average was up 11.75 points, or 0.08 percent, while the S&P 500 lost 0.18 percent and the Nasdaq was down 0.33 percent.

Tags: , ,

Comments

comments