The WSJ Econ Roundup:
“The U.S. economy strengthened during the first three months of the year, but at a weaker-than-expected pace, the government said Thursday in a report that also suggested inflation rose at a faster rate.
The reading on gross domestic product for the January-to-March quarter, reported by the Commerce Department, marks a slight pickup from the 4.1% rate registered in the final quarter of 2003. While the first-quarter figure suggests that the recovery is in good shape, it fell short of the strong 5% pace that economists were forecasting. . .
The report also showed that gauges of inflation rose at a higher rate. The price index for gross domestic purchases climbed at a 3.2% rate in the first quarter; it advanced 1.3% in the fourth quarter. The government’s price index for personal consumption rose at a 3.2% rate January through March. It had risen just 1% in the fourth quarter.”
Here’s the key stat to me:
Federal government spending went up 10.1% in the first quarter, compared with a 0.7% climb in the fourth. State and local government spending fell 2.6%.
That suggest that government and military spending are still a key driver of the recovery — not typically an encouraging sign.
GDP Rose 4.2% in Quarter; Key Inflation Gauge Climbs
Consumer Spending Increases 3.8%; Initial Jobless Claims Drop by 18,000
April 29, 2004 9:10 a.m.