GDP slightly better than expected: +0.6% vs. +0.5% consensus. This was the slowest growth since 2001, but it will support the arguments of those who argue that the economy’s demise has been exaggerated. The tepid growth is mostly attributable to growing inventories. Without this expansion say economists, the economy would not have grown at all. The report’s price index, meanwhile, grew by 2.6%, also better than expected. Bloomberg:
Spending by households, the biggest part of the economy, grew last quarter at the slowest pace since 2001, when the U.S. was in a recession, as job losses mounted, food and fuel prices surged and property values tumbled. Federal Reserve policy makers are forecast to cut the benchmark interest rate today to limit the downturn.
“The economy is struggling, it’s not going anywhere fast,” Mark Zandi, chief economist at Moody’s Economy.com in West Chester, Pennsylvania, said before the report. “The fundamental problem is the declines in home values and resulting impact on the financial system that’s weighing sharply on the consumer.”
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