US Gross Domestic Product (GDP) in real/constant dollar terms, increased at annual rate of 0.6 percent in the first quarter of 2008, the same rate of growth as in the fourth quarter of 2007, according to estimates released today by the Bureau of Economic Analysis. The growth reflected an increase in inventories as consumer spending slowed.

The sources of economic growth in the first quarter were slightly different than in the fourth quarter with continued weakening of consumer spending and a further decline in construction spending—offset by a rise in inventory investment. Consumer spending expanded at the slowest pace since 2001, when the US was in a recession.

Consumer spending, which accounts for about 70% of the economy, rose at a 1 percent annual pace, the smallest rise since the second quarter of 2001 and less than half the 2.3 percent increase in the previous quarter.

Prices
Prices of goods and services purchased by U.S. residents increased 3.5 percent, following a 3.7 percent increase in the fourth quarter; 0.3 percentage point of the first-quarter increase was due to government pay increases.

Food and energy prices continued to push up overall inflation.

Personal Income

Real disposable personal income—personal income adjusted for inflation and taxes—rose 1.4 percent, compared with an increase of 0.1 percent in the fourth quarter.

Final sales of computers contributed 0.12 percentage point to the first-quarter growth in real GDP after contributing 0.16 percentage point to the fourth-quarter growth.  Motor vehicle output subtracted
0.30 percentage point from the first-quarter growth in real GDP after subtracting 0.86 percentage point from the fourth-quarter growth.