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Kimberly Amadeo

GDP Growth Less Than Ideal

By April 29, 2011

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The BEA 's advance estimate of GDP for the first quarter (January-March) 2011 was 1.8%, down from last quarter's growth rate of 3.1%. This is just a little lower than the ideal GDP growth rate, certainly less than the 3% or more needed to substantially reduce  unemployment. However, this is just the advance estimate, and will probably be adjusted next month when more data arrives.

Growth was driven by personal consumer expenditures, although not as high as Q4 2010 (which has the advantage of holiday sales). The economy was helped by an uptick in exports, itself a result of a declining dollar. Growth would have been stronger, except for the drag in state and local government spending, and businesses not restocking inventory. Imports, which are a subtraction in the calculation of GDP, decreased.

For a history of all GDP reports since 2007, see GDP Current Statistics.

What It Means to You

Economic growth driven by consumer confidence means the economy is getting on strong footing. Now, more than ever, businesses need to understand consumer spending trends, and understand how the recession has changed shopping habits. An important trend is the Shift to Thrift, where everyone is focused on value. Whether you are a corporate CEO, small businessperson or salaried employee, make sure you communicate the value you provide. This value is your competitive advantage and your brand promise.

Since exports are another important driver, Americans must become more aware of global trends. The BRIC countries -- Brazil, Russia, India and China -- are growing their middle class and purchasing power. Businesses who provide value to these and other emerging markets will prosper in the landscape that is emerging beyond the Great Recession.

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