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Tipsheet

In First Quarter, GDP Grew Less than Expected. Unexpectedly.

In the first quarter of the year, the U.S. economy slowed from last quarter's 3 percent growth to 2.2 percent, according to the latest from the Department of Commerce:

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Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 2.2 percent in the first quarter of 2012 (that is, from the fourth quarter to the first quarter), according to the "advance" estimate released by the Bureau of Economic Analysis.  In the fourth quarter of 2011, real GDP increased 3.0 percent. …

The increase in real GDP in the first quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, private inventory investment, and residential fixed investment that were partly offset by negative contributions from federal government spending, nonresidential fixed investment, and state and local government spending.  Imports, which are a subtraction in the calculation of GDP, increased.

The deceleration in real GDP in the first quarter primarily reflected a deceleration in private inventory investment and a downturn in nonresidential fixed investment that were partly offset by accelerations in PCE and in exports.

Bloomberg, at least, was looking for a 2.5 percent growth rate:

The U.S. economy expanded less than forecast in the first quarter as the biggest gain in consumer spending in more than a year failed to overcome a diminished contribution from business inventories.

Gross domestic product, the value of all goods and services produced in the U.S., rose at a 2.2 percent annual rate after a 3 percent pace, Commerce Department figures showed today in Washington. The median projection of economists surveyed by Bloomberg News called for a 2.5 percent gain.

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Just another feather in the cap of the Obama economy -- onward!

The US economy started the year at a less than scintillating pace, giving the Republicans, especially likely presidential challenger Mitt Romney, fodder against President Obama. …

Although the economy is in no danger of sinking into another recession, the slower rate of growth is now in what economists term the “gray zone” for Mr. Obama. If the economy grows at 3 percent or more, voters are generally happy. If the economy grows at 2 percent or less, voters are antsy.

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