The Commerce Department (DOC) reported this morning that U.S. economic growth had slowed in the first quarter of 2012. Gross domestic product (GDP) increased at an annual rate of 2.2%, compared to 3.0% in the fourth quarter of 2011.
While the slower growth is bound to raise concerns about the strength of the U.S. economic recovery, much of the negative aspects of the GDP report were offset by an increase in consumer spending. Personal consumption expenditures (PCE) increased by 2.9% in the first quarter, compared with an increase of 2.1% in the fourth of last year.
With business spending, the picture was just a mixed. Real exports of goods and services increased by 5.4% in the first quarter of 2012, compared with a 2.7% increase in the prior quarter, but overall business spending fell. Nonresidential investment decreased by 2.1% in the most recent report, in contrast to a much more robust 5.2% increase at the end of last year.
Further contributing to the deceleration was a continued decline in federal spending, albeit often at a lower clip. Overall, federal spending decreased by 5.6% in the first quarter, compared to a decrease of 6.9% in the fourth of 2011. National defense decreased by 8.1%, as opposed to last year's 12.1% freefall. Nondefense spending had experienced a 4.5% increase at the end of last year, but decreased by 0.6%, in the first three months of 2012.
The DOC's Bureau of Economic Analysis, responsible for issuing the quarterly readings, stressed that this 2.2% reading was an advance estimate, based on source data that are incomplete or subject to further revision by other agencies. A second, more accurate reading for the first quarter of 2012 will be released at the end of May.
Jacob Barron, CICP, NACM staff writer