ZitatThe Commerce Department reported Friday that the economy grew 2.5%, on an annualized basis, in the 1st Quarter of the year. Economists had been expecting a stronger performance, with the consensus estimate predicting 3% growth. The economy grew 0.4% in the 4th Quarter last year.
The growth was fueled by a bigger increase in personal consumption than was expected. Personal consumption grew 3.2% in the quarter, almost double the 1.8% growth in the fourth quarter. Consumer spending accounts for roughly 70% of the economy.
The growth in consumer spending doesn't look sustainable. Personal income fell sharply in the quarter, falling 3.2% after a 8.1% gain in the fourth quarter. Disposable income dropped 4.4% after a 7.9% gain in the fourth quarter. This is likely do to some taxpayers shifting income to the fourth quarter last year, before higher tax rates took effect.
It is this forwarding of income that fueled much of the quarter's consumer spending. Also fueling the spending was a big drop in personal savings. The personal savings rate dropped to 2.6%, from 4.7% in the fourth quarter. The drop in income in the quarter suggests a consumer pull back next quarter.
The other factor driving the 2.5% growth was a big rise in business inventories. This "stocking the shelf" component added 1.03% points to the GDP growth. If consumer spending pulls back, however, it will take longer to clear this inventory buildup.
The economy remains very weak. Numerous indicators over the past few weeks have pointed to a clear slowdown during March. The trend lines, especially the falling personal and disposable income suggest this slowdown will continue.
This post has been underwritten by the Mobil Corporation and viewers like you.
Just plain pathetic. A chain of local C-stores that had made it so far is closing about 12 stores here at the end of the month. Guy has enough employees to come under Obamacare and just doesn't want to deal with it.
"Rightful liberty is unobstructed action according to our will within limits drawn around us by the equal rights of others. I do not add 'within the limits of the law' because law is often but the tyrant's will, and always so when it violates the rights of the individual." Thomas Jefferson
The "conservative movement" isn't doing a very good job of educating the citizenry on matters economic.
And that is what was different then, versus now. In the late 1970s Milton Friedman made a television series which played on PBS. "Free to Choose" taught basic, classical liberal notions of economic and personal freedom. The closest thing we have today is small L libertarianism.
RIGHT'S RIGHT 
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Fri Apr 26, 2013 1:00 pm
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