The U.S. economy roared back in the first quarter of the year. Friday morning the U.S. Commerce Department reported the Gross Domestic Product increased at a 5.8% annual rate in the first three months of the year.

This measure of output of goods and service in the country posted its best showing since the final quarter of 1999 and likely indicates the recession, which official began in March of last year, will be one of the mildest in the country’s history.
What makes this figure remarkable is that the GDP posted a 1.3% drop in the third quarter of the year and posted an anemic 1.7% performance in the final quarter of 2001. However, Newport Communications Senior Economist Jim Haughey says he was not surprised by this latest performance.
“The growth rate was not unexpected based on January and February reports that exports, consumer spending, home construction and defense spending were rising rapidly and that the pace of inventory disinvestment was slowing quickly,” he says. “The change in inventories accounted for a little over half of GDP gain. But inventories still fell in the first quarter, so there are likely two more quarters ahead with a strong inventory boost to GDP.”
Although the growth rate for consumer spending fell from 6.1% in the fourth quarter to 3.5% in the first quarter, there was a substantial rise in the growth of spending for nondurable goods - the key driver for dry van freight. Haughey says, “Growth jumped from 2.5% in the late fall to 8.4% in the winter. A pickup in nondurable goods purchases has always signaled the end of a recession or economic slowdown.”
Overall, spending in the United States grew 6.9%, after inflation, in the first quarter from the combination of current production, inventory drawdowns and imports less exports, according to Haughey.
“It had averaged only 0.5% over the past year. The surge in growth was fueled by a 10.5% rise in real disposable income, mostly due to the federal income tax witholding cut in January.”
Haughey added there were only a few weak sectors in the first quarter. Nonresidential construction fell 20%, business equipment and software dropped 0.5% and imports - a subtraction from GDP but not from freight volume - soared 15.5%.