Economy growing ... but just barely
GDP rose at a 0.6 percent pace in the first quarter, the US government reports.
America avoided a period of outright decline in national output as 2008 began, revealing an economy that is not so much buckling as slowly sagging.
For practical purposes, positive growth numbers released Wednesday are just a technicality. It feels like a recession to American workers, consumers, and businesses. A period of significant weakness could persist for months to come, perhaps well into 2009.
What's equally notable, however, is that this downturn is unfurling slowly and in a muted fashion, despite the shocks of soaring energy and food costs and a plunge in real estate wealth.
Some economists even raise the possibility of something unprecedented in records since World War II: that economic officials will declare a recession even as gross domestic product continues to rise.
In the first three months of the year, US economic output rose at a 0.6 percent annual pace, the Commerce Department reported Wednesday. Jobs, wages, and consumer spending are weakening, but only slowly.
In the current economic cycle, much of the direct impact of a consumer slowdown is being felt overseas, rather than in the domestic economy.
"In some sense the recession has been outsourced," as people postpone purchases of BMW cars and Korean flat-screen TVs while still paying for rent or child care, says Mark Vitner, an economist at Wachovia Corp., a banking firm in Charlotte, N.C. "If you look at the composition of these numbers ... it really begs the question of whether we're going to see a decline [of GDP] at all in 2008."
For a couple of years now, America's hunger for imported goods has been cooling – generally rising but at a decelerating pace. In some recent quarters, the pace of imports has actually fallen.