4/27/2007: First Quarter GDP Growth Disappoints
The "advance" first quarter GDP release showed that the economy grew at a disappointing 1.3% annualized rate for the quarter, which was the softest growth for a quarter in four years. It was below the consensus expectation of 2%. Personal consumption growth was strong, expanding 3.8%. However, for the second consecutive quarter, the economy contracted outside of personal consumption. Residential real estate investment continued as the weakest segment. It declined at a 17% annualized rate for the quarter, subtracting 1% from overall growth. Business investment (non-residential fixed investment) grew 2%. While tepid, the expansion in business investment for the quarter came as a relief after the contraction in the fourth quarter. Trade was a drag on growth as imports rose on higher energy prices and exports fell.