Consumer Spending Helps GDP Grow 3.2%

Washington, DC, April 30, 2010--Consumer spending helped first quarter GDP to a growth rate of 3.2%, the Commerce Department estimated Friday.

The 3.2% increase was exactly as expected by economists.

GDP growth is running at 2.5% in the past year, following the worst downturn in generations. GDP rose at a 5.6% pace in the fourth quarter, primarily because of inventory reductions.

In the first quarter, by contrast, private domestic demand was the main engine of growth. Consumer spending rose at a 3.6% annualized rate, while business investments in equipment and software jumped at 13.4% pace.

Final sales to domestic purchasers increased at a 2.2% rate, up from 1.4% in the fourth quarter.

However, there were significant weak spots in the mix of growth in the first quarter.

Real disposable incomes were flat. And after having risen in the third and fourth quarters, investments in homes reverted, falling at a 10.9% annual rate.