Advance Estimate of GDP for the First Quarter of 2012
The following statement was provided by Alan B. Krueger, Chairman of the Council of Economic Advisers.
Today’s advance estimate indicates that the economy posted its 11th straight quarter of positive growth, as real GDP (the total amount of goods and services produced in the country) grew at a 2.2 percent annual rate in the first quarter of this year (see first graph below). While the continued expansion of the economy is encouraging, additional growth is needed to replace the jobs lost in the deep recession that began at the end of 2007.
It is important to recognize that GDP is made up
of various components. Several of the private sector components of
GDP grew solidly in the first quarter. For example, personal consumption
expenditures increased by 2.9 percent at an annual rate in 2012Q1, as compared
with 2.1 percent in the previous quarter. Auto production increased
robustly, accounting for fully half of overall GDP growth in the first
quarter. Residential construction increased by 19 percent, marking the
first time since 2005 that residential construction has increased four quarters
in a row. These are encouraging signs that the private sector is
continuing to heal from the worst recession since the Great Depression.
Overall GDP growth was weighed down by reduced
spending in the government sector, however. According to the Bureau of
Economic Analysis, national defense expenditures fell by 8.1 percent in the
first quarter. Government spending across all levels subtracted 0.6
percentage point from overall GDP growth. The latest report continues a
pattern of moderate growth in the private sector components of GDP and
contraction of the government components of GDP. The second graph below
displays the four-quarter percent change in the private components of real GDP
and of government spending.
If only the private sector components of GDP are
considered, GDP grew by 3.5 percent in 2012Q1.
Click on graphs to enlarge.
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