Consumers Help Drive U.S. Economy to 3.2% Growth Rate

The biggest contributors to consumer spending growth were purchases of durable goods like cars. In addition to consumer spending, nonresidential fixed investment also played a role in overall output growth. Businesses’ purchases of equipment and software, for example, grew at an annual rate of soccer jerseys 13.4 percent last quarter, after a 19 percent increase in the last quarter of 2009.
“This is very good news, since it indicates businesses are feeling more confident about the expansion to start spending some of their cash,” Mr. Gault said. “If businesses are spending more on equipment, usually that would go along with more hiring, too.”
Federal government spending, which includes remaining stimulus money, grew at an annualized rate of 1.4 percent in the first quarter of 2010. But this was more than offset by continued cuts from state and local governments, whose spending decreased 3.8 percent. It was the third quarter in a row in which state and local spending fell.
In the meantime, companies have been enjoying their new customers.
Nate Evans, who owns a pottery-making business with his wife, Hallie, in New Albin, Iowa, said that their sales in 2009 were the worst ever but that they were just starting to see things pick up. The Evanses sell their pottery from their home workshop as well as in galleries in nearby states, and at craft shows in Wisconsin, Minnesota, Iowa and Illinois.
“I felt like the energy of the crowd was better,” Mr. Evans said of their first fair this year, in Minnesota. As did other craft sellers, he said. “Most of the people we talked to said it was better than last year. Hey, it’s not great, but it’s better than last year.”
The broadest measure of the overall economy grew at a seasonally adjusted annual rate of 3.2 percent in the first quarter of 2010, after gains of 5.6 percent in the fourth quarter of 2009 and 2.2 percent in the third quarter.
While the expansion in output was welcome, it still has not brought the level of hiring growth needed to recover ground lost during the recession.
For the third quarter in a row, the United States economy showed strong economic growth, and increased consumer spending played a significant role, the Commerce Department reported on Friday.