GDP = 1.3%

Gdp_q1
By now, you know the GDP came in way below consensus. Given recent revision history, its very likely this will not be the final number.

The economy slowed to its weakest pace of gains in 4 years, when GDP was 1.2% during Q1 2003.

Housing gets most of the blame (duh), but do not ignore the accelerating inflation factor as a key element. Most traders realize the Fed is watching that component closely; Hence, why you are not hearing the usual "Rate Cut" chants from the cheap seats. PCE rose 3.4% (it decreased 1.0% Q4) Even the nonsensival core PCE  (ex food and energy) was plus 2.2% (following 1.8% Q4).

International trade, Business Capex spending, Inventory growth, and decreased government spending all weighed on the economy to produce that 1.3% number.

The one bright spot:  Durable goods. Plus 7.3% in Q1 follows +4.4% in Q4. Pretty much everything else was punk.

Nice table via the WSJ

GDP components and their impact on growth.
GDP Component Added (subtracted)
from GDP
(%)
Residential fixed investment (0.97)
International trade (0.52)
Inventories (0.30)
Consumer spending 2.66
Business spending 0.21
Government spending 0.18
Source: WSJ, Commerce Department


Source:
U.S. Economic Growth Is Slowest In 4 Years Amid Housing Slump
JEFF BATER
WSJ, April 27, 2007 9:58
http://online.wsj.com/article/SB117767443639284710.html

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