The GDP growth rate is out for Q1 2013, and at 2.5%, it is a nice improvement over Q4 2012’s 0.4% rate, which was revised up from the original estimate of -0.1%. It’s also lower than the 3% growth the Keynesian economists the Obama regime is strangely still paying attention to, predicted.
A full percentage point of that 2.5% growth was a one time effect of the farming industry recovering from a drought. So the real growth rate was an anemic 1.5%
Household incomes also dropped at a 5.3 percent rate in the first quarter of 2013, and the saving rate – the percentage of disposable income households are socking away – fell to 2.6 percent, the lowest since the fourth quarter of 2007.
Neither of those last two items are a good sign for increases in consumer spending, which is going to get worse, as federal taxes go up, as well as local taxes. The tax burden will be worse in the so-called “Blue” states as their expensive social programs continue to overwhelm their budgets, and their revenue generating working classes flee for states with less oppressive taxes on anyone moderately successful.
The only bright point was that the official government inflation rate was only 0.9%. That is good for tax paying consumers, but is another missed milestone of the Obama Economic Team. They want at least 2%.