The Commerce Department reported that, after expanding at an annual rate of 0.4 percent in the fourth quarter of 2012, real gross domestic product in the U.S. increased at a rate of 2.5 percent during the first quarter of 2013.
This is the first of three estimates for the period and the details are not very encouraging. Like most other economic reports over the last month or so, today’s result came in well below the consensus estimate, in this case an expectation of a 3.1 percent growth rate.
Consumer spending continues to drive the U.S. economy, accounting for 2.24 percentage points of the overall 2.5 percent gain, and household expenditures on such items as housing, utilities, and healthcare dominated this category.
Declining government spending subtracted 0.80 percentage points from growth and net exports subtracted 0.50 percentage points, this combination offset by a positive contribution of 1.56 percentage points from gross private domestic investment, two-thirds of which was accounted for by a surge in inventory rather than actual investment.
Following a dramatic decline in the fourth quarter, nearly all of the government spending cutbacks during the first quarter came from defense in what was the steepest back-to-back drop in military outlays since the 1950s.