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US GDP: Let’s go to the charts!

Matt Phillips

Some—like, say, us—might scoff at using GDP to gauge human well-being. But the measure—of total value of goods and services in the economy—deserves attention from those trying to track the supertanker that is the US economy. So here’s how today’s report on first-quarter GDP panned out.

The headline

Decent. But the 2.5% annualized growth rate posted between January and March was slightly under Wall Street’s expectations of 3.2%. Here’s a look at the last five years of quarterly numbers.

So why the disappointment?

Government spending. As in all advanced economies, the government’s actions account for a substantial chunk of economic activity. And real government spending continues to drag on the overall economy. During the first quarter it continued to shrink at at annualized rate of 4%. Though that’s slightly less than the 7% shrinkage posted at the end of 2012.

A lot of that shrinkage was due to cuts in defense spending, part of the bigger US effort to reduce spending—known to the cognoscenti as “the sequester.”

On the other hand

The US housing renaissance continues to help drive growth, rising 12.6% during the quarter.

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