Today, the Bureau of Economic Analysis (BEA) released their first preliminary installment of the Q1 2008 GDP report showing a truly anemic annual growth rate of 0.6%.This continuation of dramatically slower growth was primarily the result of accelerating declines in fixed residential investment, a substantial decline in fixed non-residential investment (particularly a 6.2% decline to non-residential structures), and far from outstanding growth in both the export of goods and services.
In fact, the continuation of typical growth rates for exports seems to further suggest that the exceptional growth seen during Q3 2007 was an temporary aberration, a result of there being a brief disconnect between the slowing U.S. economy (and weak dollar) and the rest of the world economies relative strength.
Now that the world economies are slowing as well, it’s unlikely that exports will provide much of a crutch against which the weakening U.S. economy can lean.
Residential fixed investment, that is, all investment made to construct or improve new and existing residential structures including multi–family units, continued its historic fall-off registering a whopping upwardly revised decline of 26.7% since last quarter shaving 1.23% from overall GDP.
Furthermore, combined with the sharp drop-off in Non-residential fixed investment, total fixed investment subtracted a whopping 1.5% from overall GDP easily exceeding the positive contributions made by all personal consumption of services in the quarter.
The following chart shows real residential and non-residential fixed investment versus overall GDP since Q1 2003 (click for larger version).
