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| First-Quarter Gross Domestic Product (#1) - Apr. 28, 2005 |
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Summary
Earlier this morning, the Commerce Department reported that real gross domestic product grew at a 3.1% annual rate in the first quarter, versus a 3.8% rate during last year's fourth quarter. Overall, this was a very weak report.
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This morning's report from the Commerce Department on first-quarter gross domestic product was very disappointing in more than one critical area. Inflation was up, maintaining my contention of a few quarters back that the US economy was increasingly involved in a "stagflation" episode.
Moreover, today's numbers showed that GDP growth was seriously impaired by the nation's expanding trade deficit, something I wrote and warned about in prior research material.
In addition, roughly 39% of the growth in first-quarter GDP was the result of inventory accumulation. Excluding inventory change, real final sales rose at a mere 1.9% rate.
I will publish a more detailed examination of today's report soon.
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