Economy Grows 3.5% in Q1 Posted by AVCU on 10:00 AM

The Commerce Department reported first quarter economic growth expanded at a 3.5% annual pace. Consumer spending, accounting for two-thirds of the nation’s GDP, rose at a 3.6% rate last quarter, the largest quarterly increase since the first part of 2007. The higher spending figure, when compared to the 1.6% pace the previous quarter, in essence added 2.5 percentage points to the GDP result. Although job growth returned in March, thanks to the hiring of federal census workers, the national unemployment rate remains at 9.7%. That figure is even higher in some states whose rates have been in the double-digits for more than six months. Michigan’s unemployment rate stands at 14.1% followed by 13.4% in Nevada and 12.6% in California.

Last week the FOMC remained in cautious mode retaining its overnight benchmark target range for fed funds between 0 and 0.25%, the thirteenth consecutive meeting which they have taken such a stance. Commerce reported that disposable income increased $41.7- billion (+1.5 percent) in the first quarter as well – slightly less than the 3.5% pace during the previous quarter. The price index related to the GDP increased 1.7% compared with an increase of 2.0% in the fourth quarter. Excluding food and energy, the price index increased 1.1%.