The Gross Domestic Product (GDP), the broadest measure of the overall health of the American economy, grew at an annual rate of 3.1 percent during the first quarter of 2005, down from 3.8 percent the previous quarter, according to the Commerce Department. The “pot hole” was blamed on reduced spending by consumers and businesses, probably compensating for higher energy prices. Whatever the reason, slower growth has raised questions about the country’s economic health and recent job growth forecasts.
Hidden among the more publicized data in the report were the following facts:
- Personal income grew by $58.7 billion or 2.4 percent in the first quarter 2005 compared with $253.4 billion or 11.9 percent in the final quarter of 2004.
- Personal taxes increased $17.6 billion last quarter, down slightly from $20.6 billion the previous quarter.
- Real personal disposable income fell 0.3 percent from January to March in contrast to an 8.3 percent increase between October and December.
- Personal saving declined to 0.6 percent or $52 billion in the first quarter from 1.6 percent or $145 billion the previous quarter.
Personal expenditures on housing, household operation (other than electricity and gas) and medical care surpassed those of the previous quarter as well.
“America’s economy continues to grow on a steady and sustainable path of expansion. Businesses continue to spend and invest and more Americans are working today than ever before. Our economy has kept a solid pace of growth for the past two years. Our growth for this quarter of 3.1 percent comes on top of last year’s strong 4.4 percent growth. But there is still more work to do.” Commerce Secretary Carlos M. Gutierrez said in a written statement.
A growth rate of 3.1 percent is the slowest first quarter growth rate since 2003.