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April 28, 2005

First Quarter GDP Growth Slows

The Financial Times reports:

FT.com / US - US GDP growth slows to 3.1 per cent: By Christopher Swann in Washington: The US economy expanded at a slower-than-expected 3.1 per cent rate in the first quarter, its weakest performance in 2 years and below what most analysts consider its non-inflationary potential. The bloated trade deficit dragged the growth rate lower. But spiralling energy costs also appear to have stunted consumer and business spending....

More disappointing was a slowdown in business spending on equipment and software - which grew by 6.9 per cent annualised, compared to 18.4 per cent in the fourth quarter. Economists in the private sector and the Federal Reserve have been hoping that business investment would continue to power ahead as consumers started to rein in their spending. Data over the past few days has now cast that into doubt. ...

The core personal consumption expenditure index - the Federal Reserve's favoured measure of inflation - rose at 2.2 per cent - its fastest rate since the fourth quarter of 2001. In the previous quarter it was rising at a 1.7 per cent pace. "Overall the report is well below expectations," said Matthew Martin, an analyst at Economy.com...

Posted by DeLong at April 28, 2005 08:33 PM