Austan Goolsbee, chairman of the White House Council of Economic Advisers, gives his take on the disappointing 1.8 percent growth rate estimated for GDP in the first quarter of the year:
There are two things about this report that caught my attention. The first was the extent to which the growth rate was reduced by cutbacks in government spending:
Gross domestic product growth was also slowed by a ... decline in government spending. Federal government spending sank 7.9 per cent, much faster than the 0.3 per cent decline recorded in the fourth quarter and local and state government spending fell 3.3 per cent, compared with a 2.6 per cent drop in the last three months of 2010.The second is the falloff in business investment, one of the sectors that is typically strong in a recovery:
Nonresidential structures decreased 21.7 percent, equipment and software increased 11.6 percent and real residential fixed investment decreased 4.1 percent.In addition, new claims for unemployment insurance continued their recent upward trend.
Overall, not the signs of a robust recovery we've been hoping for.