According to preliminary estimates released this morning by the BEA, economic growth slowed dramatically from 3.1% during the fourth quarter 2010 to just 1.8% during the first quarter of 2011. The following table shows the contributors to aggregate demand for American products, and how they have been changing:
| Contributors to Real GDP Growth | |||||
|---|---|---|---|---|---|
| Year | 2010-1 | 2010-2 | 2010-3 | 2010-4 | 2011-1 |
| Household Consumption | 1.31% | 1.53% | 1.66% | 2.78% | 1.90% |
| Business Fixed Investment | 0.41% | 2.19% | 0.19% | 0.86% | 0.09% |
| Government Consumption | -0.31% | 0.75% | 0.75% | -0.33% | -1.04% |
| Net Exports | -0.26% | -3.37% | -1.70% | 3.23% | -0.06% |
| Inventory Change | 2.48% | 0.75% | 1.59% | -3.17% | 0.83% |
| Total Change in Real GDP | 3.7% | 1.7% | 2.5% | 3.1% | 1.8% |
Government consumption is now a drag on aggregate demand, as state and local governments are being forced by their balanced budget requirements to tighten their belts. During the third quarter of 2010, governments added 0.75% to economic growth, but in the fourth quarter they subtracted
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Noureen DeWulf Nicollette Sheridan Amber Heard Veronica Kay Mýa
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