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 Component||Added (subtracted)
from GDP (%)
|Residential fixed investment||(0.97)|
|Source: WSJ, Commerce Department|
U.S. Economic Growth Is Slowest In 4 Years Amid Housing Slump
WSJ, April 27, 2007 9:58