KAI RYSSDAL: It’s Friday today. The last one in April. And that sends all eyes to the Commerce Department for one of those A-list economic indicators we all know and love.
Gross domestic product numbers come out the last Friday of the month. And today’s special because it’s our first look at how the economy did January through March. Slooooooooow is how the economy did January through March, growing at an annual rate of just just 1.3 percent.
The poor showing surprised a lot of economists. They’d been expecting something closer to 2 percent. Which makes you wonder whether they’ve heard of something called the housing market.
Ashley Milne-Tyte has more.
ASHLEY MILNE-TYTE: Spending on housing dropped 17 percent in the first quarter, shaving almost one percentage point off overall GDP. Hugh Johnson is chief economist with Johnson Illington Advisors. He says the housing slowdown alone won’t cause a recession, but then housing wasn’t the only red flag in the report.
HUGH JOHNSON: The trade deficit was also a fairly substantial problem. And I think, as a result, that’s why we came to sort of what you might call the edge of a recession. It’s positive growth but barely positive growth.
Global Insight chief economist Nariman Behravesh predicted the anemic 1.3 percent rise in GDP. But he was surprised the report found a 1 percent drop in exports. He says it’s inconsistent with the weakness of the dollar, and how popular U.S. goods have been abroada€¦
NARIMAN BEHRAVESH: So our best guess is that this weak export number will get revised upward for the first quarter and for sure that in the second and third quarters we’ll actually see fairly robust export growth.
But on a less positive note Hugh Johnson says core inflation rose faster than it did last quarter.
JOHNSON: It’s not at a level that I believe will really alarm or scare the Federal Reserve. And i think that’s the important thing. It’s not so high that it’s likely to invite the Federal Reserve to do something about it by raising short-term interest rates.
In fact, he says, if anything, there will be pressure to lower rates. Overall, he says, all you can say about the economy right now is that it’s limping along.
In New York, I’m Ashley Milne-Tyte for Marketplace.
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