Contributions to % Change in GDP Seasonally Adjusted Annual Rate

Gross domestic product expanded at an annualized rate of 3.2 percent in the first quarter according to the advance estimate from the Bureau of Economic Analysis, down from 5.6 percent in the fourth quarter of 2009. Consumer spending picked up, contributing 2.6 percentage points of the first quarter growth as consumers came out of their bunkers. Inventories accounted for 1.6 points as businesses cautiously restocked after the massive depletion of inventories in the first half of last year. Investment in equipment remained strong with businesses ramping up their capital spending, but investment in structures slipped again due to the overhang of space in commercial real estate. Trade, government and homebuilding subtracted from growth. Expect GDP to moderate in the next two or three quarters; consumer spending is unlikely to ramp up quickly, the boost from the stimulus is fading, the swing in inventories will level out while state and local governments will remain under intense pressure to cut spending. Employment growth is expected to gain momentum as the year progresses, which will put the recovery on a more sustainable path.

Source: Bureau of Economic Analysis, Grubb & Ellis