The gross domestic product (GDP) was higher than expected in the first quarter, leading many to believe that the economic recession may have hit its bottom at the end of 2008. The GDP fell 5.7 percent in the first quarter, a much smaller drop than the 6.3 percent GDP fall in the fourth quarter of 2008.
The GDP is expected to fall only 1.8 percent in the second quarter, according to a leading panel of economists. Also, the National Association of Business Economics says that the GDP will rise 0.7 percent in the third quarter, and 1.8 percent in the fourth quarter.
Consumer spending had a role in increasing the GDP 1.08 percentage points in the first quarter. Spending by consumers advanced 1.5 percent, which is above the 4.3 percent drop in consumer spending in the fourth quarter.
Additionally, durable good purchases–which include long-lasting expensive items including cars–increased 9.6 percent in the first quarter, which is higher than the expected 9.4 percent increase. It’s also well above the 22.1 percent drop in the fourth quarter.
This news, coupled with the rise in overall consumer confidence this month, bodes well for the economy this year. In March, Federal Reserve Chairman Ben Bernanke predicted that the economy will improve by year’s end, and noted that the housing market, spending and consumer confidence were all on an upswing.
Friday, May 29th, 2009
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