A new Bureau of Economic Analysis (BEA) report for March 2013 showed a continued increase in economic growth and personal income for the United States. According to the BEA, the annual rate for the first quarter of 2013 averaged at 2.4 percent.
While this was slightly less than expected due to lower inventory purchasing by businesses, it shows a strong recovery from the last quarter of 2012, in which real GDP only increased by 0.4 percent due in part to government spending cuts.
According to the BEA report, the acceleration “primarily reflected an upturn in private inventory investment, an acceleration in [Personal Consumption Expenditure], a smaller decrease in federal government spending, and an upturn in exports,” according to the report. Some of the big winners included motor vehicles, which added 0.28 percent to the GDP, and personal consumption, which grew 3.4 percent compared to only 1.8 percent in the last quarter of 2012.
Additional reports from the BEA show that personal income increased by $30.9 billion in March 2013, a jump of 0.2 percent that matches the growth of personal consumption in the month, a sign that workers are both earning and spending more in equal amounts.
These signs of economic growth follow close on the heels of positive reports on the U.S. housing industry, which is emerging from the recession with new stability and an increase in value. The greater value has in turn led to more interest in construction, as shown by a May 13 report by the American Institute for Economic Research, which showed that building permits were up year-over-year for privately-owned housing units. The same report showed all the institute’s leading indicators for the private sector also increased in the study, showed both optimism and expansion in a variety of markets.
The two factors — new housing start and permits, along with a growing private economy — are likely related, as the institute points out. Housing starts lead to an increase in construction, which calls for a wide array of specialty jobs and materials that in turn benefit a broad number of manufacturing businesses, creating a healthy ripple effect throughout the economy.
If these trends continue, real GDP will see higher numbers in the second quarter of 2013, as well. While the future of the economic growth is heavily influenced by government decisions and the general path to financial recovery, consumer confidence remains a key piece of the puzzle – and in this area signs are strong.