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The economy grew 3.2% in the first quarter of the year, the Commerce Department reported Friday, another indication a steady, though modest, recovery has taken hold.

The annualized rate of growth of the gross domestic product -- the nation's total production of goods and services -- was down from the 5.6% rate of the last three months of 2009. But that had been expected as the effect of the federal government's stimulus policies peaked during that period.

"We're still running on the fumes of stimulus in the U.S. economy," said Diane Swonk, chief economist at Mesirow Financial in Chicago. "It's a recovery, but by any standard is still a muted recovery. But we're thankful to have what we've got," given the depth of the recession, she said.


The median forecast for first quarter GDP was 3.4%, according to a survey of economists by Thomson Reuters, and Friday's figure fell below that. But that projection reflected more bullish sentiment about the economy in recent weeks. The National Assn. of Business Economics had forecast in February that first-quarter GDP would be 3%.

The GDP growth rate released Friday by the Commerce Department's Bureau of Economic Analysis is only modest, but still is a dramatic improvement over the same period last year. At the bottom of the recession, the U.S. economy shrank 6.4% in the first quarter of 2009.

That was the low point for the deepest recession since the 1930s, which began in December 2007. Economic growth returned last summer when the third-quarter GDP increased at an annualized rate of 2.2%.

"I think its well in line with expectations," Swonk said of the first-quarter figure. "The recovery's more broad-based. Although the momentum slowed quite a bit from the fourth quarter, the consumer showed up and we had a lot of demand, which is good."

The Bureau of Economic Analysis said growth was boosted in the first quarter by consumer spending. Real personal consumption expenditures increased 3.6%, compared with a 1.6% increase in the last three months of 2009.

Despite three straight quarters of economic growth, the recession still has not been declared officially over. The National Bureau of Economic Research, which determines the lengths of business cycles, said this month that it "would be premature" to set a date marking the end of the recession and the start of an economic expansion.

A major reason for that decision was the still-high unemployment rate.

Although job growth returned in March, with the economy creating 162,000 jobs, the national unemployment rate remained at 9.7%. The figure is higher in many states, including California, which reached a new high of 12.6% in March, tied for third-worst in the nation. The state trailed only Michigan's 14.1% jobless rate and Nevada's 13.4% figure, and was tied with Rhode Island.

"At the end of the day, none of this really matters unless we can get the employment machine going, which is coming, but very slowly," Swonk said.

GannonFan wrote:Good news, and to be expected by now, but as the last paragraph in the quote says, it's all just numbers on a page unless there's real growth in terms of employment. I'm just not sure when we'll see something real positive in that regard, and that's the troubling part.

danefan wrote:

GannonFan wrote:Good news, and to be expected by now, but as the last paragraph in the quote says, it's all just numbers on a page unless there's real growth in terms of employment. I'm just not sure when we'll see something real positive in that regard, and that's the troubling part.

A new sporting goods store just opened up near me. I went in today and was BSing with the manager. He said they had 865 applicants for 65 jobs. None of which pay more than $15 hr.

In a micro view - that aint good.

danefan wrote:

GannonFan wrote:Good news, and to be expected by now, but as the last paragraph in the quote says, it's all just numbers on a page unless there's real growth in terms of employment. I'm just not sure when we'll see something real positive in that regard, and that's the troubling part.

A new sporting goods store just opened up near me. I went in today and was BSing with the manager. He said they had 865 applicants for 65 jobs. None of which pay more than $15 hr.

In a micro view - that aint good.

AZGrizFan wrote:How much of that 3.2% annualized growth was from government stimulus money?

kalm wrote:

AZGrizFan wrote:How much of that 3.2% annualized growth was from government stimulus money?

Good question. And if not from stimulus then where? What industries are growing in the U.S.? We are overbuilt in retail as well as residential construction and will be for quite some time. And growth in the financial services sector equates to nothing other than moving money around. So where is real wealth and job producing growth going to come from? Without a trade policy that protects domestic manufacturing we might be screwed.

CitadelGrad wrote:

kalm wrote:
Good question. And if not from stimulus then where? What industries are growing in the U.S.? We are overbuilt in retail as well as residential construction and will be for quite some time. And growth in the financial services sector equates to nothing other than moving money around. So where is real wealth and job producing growth going to come from? Without a trade policy that protects domestic manufacturing we might be screwed.

So financial services don't contribute to GDP growth? Um, okay.

CitadelGrad wrote:Has it occurred to you that the financial services industry provides the capital that is needed to produce what you call "real wealth"?

kalm wrote:...The financial services sector representing a larger share of GDP is nice on paper but I think real wealth is produced through manufacturing...

kalm wrote:

CitadelGrad wrote:Has it occurred to you that the financial services industry provides the capital that is needed to produce what you call "real wealth"?

"Wealth is the abundance of valuable resources or material possessions or the control of such assets."

http://en.wikipedia.org/wiki/Wealth" onclick="window.open(this.href);return false;

Government backed toxic assets, bets on futures, and insurance contracts are not wealth.

CitadelGrad wrote:Has it occurred to you that the financial services industry provides the capital that is needed to produce what you call "real wealth"?

houndawg wrote:

CitadelGrad wrote:Has it occurred to you that the financial services industry provides the capital that is needed to produce what you call "real wealth"?

It's their customers that provide the capital. Financial services industry just moves it from this pile to that pile and keeps a little for themselves.

kalm wrote:
...Sustainable growth is the lesson we should be learning.

Z's question about deficit spending is a good example in that simply printing money and growing the national debt is not sustainable. But neither is the perpetual "growth" of the housing market or retail sector. Hence the term bubble economy in that "wealth" created is over-inflated in value, and then the bubble bursts ...

native wrote:

kalm wrote:
...Sustainable growth is the lesson we should be learning.

Z's question about deficit spending is a good example in that simply printing money and growing the national debt is not sustainable. But neither is the perpetual "growth" of the housing market or retail sector. Hence the term bubble economy in that "wealth" created is over-inflated in value, and then the bubble bursts ...

There is a sustainable growth rate for housing, too, kalm. It's not the housing growth, per se, that caused the housing bubble. It's the combination of securitized mortgages and easy money.

CitadelGrad wrote:

kalm wrote:
"Wealth is the abundance of valuable resources or material possessions or the control of such assets."

http://en.wikipedia.org/wiki/Wealth" onclick="window.open(this.href);return false;

Government backed toxic assets, bets on futures, and insurance contracts are not wealth.

Futures and insurance contracts are important tools for risk management, hence stability in capital markets.

AZGrizFan wrote:

native wrote:
There is a sustainable growth rate for housing, too, kalm. It's not the housing growth, per se, that caused the housing bubble. It's the combination of securitized mortgages and easy money.

Without securitized mortgages there's no viable place for financial institutions to invest their excess deposits. Without that alternative their interest rate offerings would plummet as they'd have no desire to attract deposits with no place to put them. It wasn't the "securitized mortgages" that caused the problem. It was the bundling of KNOWN crap and peddling it as AAA gold that led to where we're at.

kalm wrote:

CitadelGrad wrote:
Futures and insurance contracts are important tools for risk management, hence stability in capital markets.

How'd that stability work while the derivatives market was exploding?

HI54UNI wrote:Just wait. If they pass cap and trade watch it come crashing down again.