An article just released titled ‘U.S. economy tumbles in first quarter’ says:

• the U.S. GDP contracted by 6.1% in Q1 2009 as exports and business inventories plummeted. This was a much larger drop than the 4.9% drop expected by economists and follows a 6.3% Q4 2008 decline;

• an advance U.S. Commerce Department report shows business inventories plunged by a record $103.7 billion in Q1 2009, as firms worked to reduce stocks of unsold goods. This accounted for 2.8% of the GDP contraction. This was reported as good news because it suggests manufacturers and retailers have reduced the stock of unsold merchandise to manageable levels while concurrently recent manufacturing surveys have shown an improvement in new orders;

• exports dropped by 30% in Q1 2009, the biggest decline since 1969, after dropping 23.6% in Q4 2008. This decline accounted for 4.1% of the GDP contraction;

• business investment dropped 37.9% in Q1 2009, and residential investment dropped 38% – the biggest decline since the second quarter of 1980;

• consumer spending, which in the past has accounted for about 70% of GDP rose 2.2% in Q1 2009, boosted by a 9.4% increase in durable goods purchases, the first advance after four quarters of decline;

• U.S. home loan applications fell last week to the lowest level since mid-March, even as mortgage rates clung to record lows. The Mortgage Bankers Association said its mortgage applications index, which reflects demand for both purchase loans and refinancings, fell 18.1%.

Aside from the consumer spending statistic and inventory reductions, I don’t see any of this as good news in the context of near-term U.S. economic recovery. How, if at all, this data will influence the current ongoing Fed meeting and what the Fed says in its release planned for this afternoon remains to be seen.

Click here for more Economic Research.

See Blog Legal Disclaimer

Possibly Related Posts:

• U.S. January Jobs Report!
• More On Greece!
• Christine Lagarde – Listen Between the Lines!
• World Leaders – Greek Emotion?
• Roubini at Davos!

Trackback URI | Comments RSS