GDP Expands Slightly, but Gloomy Signs Persist
The economy expanded slightly in the first quarter, but its faint pulse didn't allay concerns the U.S. is in or headed toward recession.</br></br>The gross domestic product -- the nation's total output of goods and services -- increased at a 0.6% annual rate, the same as in the fourth quarter of 2007. But underlying data -- on consumer spending, business investment and construction -- paint a picture of a deteriorating economy, one that expanded only because of a rise in exports and a buildup of inventories.</br></br>Excluding inventories, GDP shrank at a 0.2% pace, the first contraction in more than 16 years. Excluding inventories and exports, the economy contracted at a 0.4% rate after increasing 1.3% in the fourth quarter.</br></br>"It would be a grave mistake to interpret [the GDP] number as even suggesting the economic and financial crisis is over," said Bernard Baumohl, managing director of the Economic Outlook Group LLC. "Clearly, this economy will remain in a recessionary environment for the rest of the year."</br></br>Many economists said the economy is likely to contract this quarter. Morgan Stanley economists predict GDP will decline 2%. Forecasters said the rebate checks being distributed by the government should help spur consumer spending, which accounts for more than two-thirds of GDP. But they disagree over how big the impact will be and whether it will occur this quarter or sometime in the second half.