Gdp Growth Slows In The First Quarter

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ncreased confidence in the economy may be reflected in the latest figures released by the U.S. Department of Commerce.

Gross domestic product increased by 3.2 percent during the first quarter of 2010, its third consecutive quarter increase. Heightened consumer spending helped to boost this figures, while prices of the goods and services accountable for this spending slowed.

This number indicates that the economy is in a better place than it was during the first quarter of 2009, according to President Barack Obama, when GDP fell by 6.4 percent.

"After the single biggest economic crisis in our lifetimes, were heading in the right direction," he said in a speech at the White House Rose Garden. "Were moving forward. Our economy is stronger; that economic heartbeat is growing stronger."

This growth was significantly smaller than the previous quarter's 5.6 percent increase, and may have resulted from reduced exports and slowed inventory investment, according to the report. Decreased investment in equipment and software as well as challenges witnessed with the real estate industry contributed to slower growth during the first quarter.

While consumer spending accounts for 70 percent of GDP, the increase witnessed during the first quarter took a toll on the amount of savings consumers were able to set aside, according to the report. The personal savings rate, which is calculated in comparison to an individual's disposable personal income, was 3.9 percent during the fourth quarter of 2009. It fell to 3.1 percent in the first quarter of 2010. Real disposable income, calculated after inflation and taxes, remained virtually unchanged during that time frame.

While these figures indicate that the economy is turning around, according to Commerce Secretary Gary Locke, there is still work to be done.

"The president is committed to enacting changes that hold Wall Street accountable and provide strong consumer protections," he said. "In the aftermath of an economic crisis that put more than eight million Americans out of work, and wiped out family savings and assets, the American people deserve and expect nothing less."

The unemployment rate is currently 9.7 percent, according to the Bureau of Labor Statistics, making it difficult for consumers to build strong credit scores and obtain loans needed to stimulate the economy.

Financial reform proposed by the Senate Committee on Banking, Housing and Urban Affairs will prevent financial institutions from becoming "too big to fail" and introduce a consumer watchdog agency aimed at protecting against deceptive practices.

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