GDP Contracts by -6.1% In First Quarter

By
Real Estate Broker/Owner

The Commerce Department announced on Wednesday that the 1st quarter GDP declined by -6.1%; this was larger than the -4.9% change that many economists had predicted.  It is the third straight quarter for GDP declines.

And while Wall St. blindly celebrated the data and the fact that consumer spending rose 2.2% in the quarter, this report validated once again that the stock market is no longer a reliable economic indicator.  The little piece of data from within the report that should have caught their attention is that according to an article on CNBC.com, "Investment by businesses tumbled a record 37.9 percent in the first quarter, while residential investment dived 38 percent, the biggest decline since the second quarter of 1980."

Isn't this how we got into this financial fiasco in the first place, too much spending and not enough investment and savings?  We have seen that this is not a viable long-term policy for economic growth, and yet here Wall St. is celebrating the same actions that have proven to be unsustainable for our country.  

 

Comments (2)

TIM MONCRIEF
Tim Monciref - Austin, TX
Over 2,000 homes sold…..

Unless we see a change in stats like this, we may see a double dip in home sales.  We all have to be cautious.......

May 01, 2009 03:49 AM
Mark MacKenzie
Phoenix, AZ

Tim,

The best expression I have heard is that, "we have fallen off a cliff and landed on a ledge".  I tend to think that this might be true.

May 01, 2009 03:55 AM