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April 27, 2007

Economy Slows To 1.3% GDP Growth Rate

They had forecasted 1.8%, which I didn't think was "slow" as AP derided. But I'd call 1.3% fairly slow.

Economic growth slowed to a near crawl of 1.3 percent in the first three months of 2007, the worst performance in four years. The main culprit: the housing slump.

The fresh reading on gross domestic product, released by the Commerce Department on Friday, was even weaker than the 2.5 percent growth rate logged in the final three months of last year. The new figures underscored just how much momentum the economy has been losing as it copes with the strain of the troubled housing market, which has made some businesses more cautious in their spending.

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The first-quarter GDP figure was the weakest since a 1.2 percent pace registered in the opening quarter of 2003. GDP measures the value of all goods and services produced within the United States and is considered the best barometer of the country's economic fitness.

"This was tepid activity in the first quarter. The economy was taking a breather," said Ken Mayland, president of ClearView Economics.

The performance was even weaker than what economists expected; they had forecast a growth rate of 1.8 percent.

Still, Federal Reserve Chairman Ben Bernanke and other economists don't expect the economy to fall into a recession this year. Former Fed chief Alan Greenspan has put the odds at one in three, however.

Even though the economy slowed in the first quarter, inflation picked up a development that will complicate the Fed's work.

If there is a recession, the media will have succeeded in what was formerly believed to be impossible -- a business cycle consisting of recession, followed by a recession, with no expansion in between.


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posted by Ace at 11:01 AM

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