My Two Cents

The GDP report

Chris Farrell Apr 29, 2009

Three things to emphasize out of the real gross domestic product (GDP) decline at an annual rate of 6.1% in the first quarter of 2009. It was a bigger-than-forecast number by a significant margin.

First, most of the drop stems from a plunge in investment spending. Real nonresidential fixed investment fell by 37.9% in the first quarter…. Nonresidential structures decreased 44.2%… Equipment and software decreased 33.8%… Real residential fixed investment decreased 38%….

Second, inflation is not a concern. The price index for gross domestic purchases, which measures prices paid by U.S. residents, decreased 1.0%…. Excluding food and energy prices, the price index for gross domestic purchases increased 1.4%….

Third, it’s increasingly likely that the unemployment rate will breach 10%….

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