The Economics of Credit
1st Quarter 2008 GDP Rises 0.9%
May 29, 2008
Real gross domestic product (GDP) continues to stay in positive territory despite lower consumer sentiment and higher credit worries, however, a closer look at the numbers reveal potential trouble ahead.
Driven largely by service exports and government spending, the U.S. gross domestic product increased at an annual rate of 0.9 percent in the first quarter of 2008, according to preliminary information released today from the U.S. Commerce Department. The preliminary rate of growth surpassed the advance estimate by 0.3 percent. The final figure, based on more complete data, will be released on June 26th.
If the preliminary figure holds, it will mark the 26th consecutive quarter of economic growth in the United States -- a six year period of sustained economic growth. The U.S. economy has not receded since the third quarter of 2001.
However, personal consumption expenditures or consumer spending, a key indicator of economic health, increased by 1.0 percent, a reduction from the 2.3 percent clip recorded in the previous quarter. The 1 percent increase marked the lowest rate of consumer spending growth in over four years.
Exports of goods and services grew at a combined rate of 2.8 percent, but 3.7 percent lower than the fourth quarter 2007 rate of 6.5 percent. Service exports increased by 5.8 percent, but again, at a much lower rate than the 13.2 percent increase in the fourth quarter 2007. Export goods increased at a 1.5 percent rate.
National defense was the leading government expenditure at 5.6 percent, an increase over -0.5 negative growth in the fourth quarter 2007.
