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June 07, 2010

The new gross domestic product

The broadest gauge of our economy, the GDP -- or gross domestic product -- was recently released for the first quarter of this year. Was it a good number?

Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"It was. ... It showed that GDP is increasing, and it has now increased for the third quarter in a row since last summer. This is further evidence, at least in some economists' opinion, that the recession is actually over. Others would say, 'Well, maybe not yet, but at least the recession is fading.' But nevertheless, it is good news.

"The other good thing about the latest GDP report is that it is broad based. That is to say, we saw both consumer spending and business spending increase. Particularly, businesses are now spending significantly more on technology and equipment.

"And very interestingly ... the contribution of government spending to the economy was actually negative. Now you might say, 'Well, how can that be with the government spending so much money to fight the recession?' True, the federal government is spending a lot of money to fight the recession, but that at least in this latest GDP report was more than offset by lower local and state government spending.

"So when you take all government -- federal, state and local -- spending together, it was actually negative. It had a negative impact on GDP. It is going to be very interesting to see how that fairs in coming quarters."

Posted by deeshore at June 7, 2010 09:45 AM