Real personal consumption expenditures increased 3.2 percent in the first quarter, compared with an increase of 1.8 percent in the fourth. Durable goods increased 8.1 percent, compared with an increase of 13.6 percent. Nondurable goods increased 1.0 percent, compared with an increase of 0.1 percent. Services increased 3.1 percent, compared with an increase of 0.6 percent.
Real federal government consumption expenditures and gross investment decreased 8.4 percent in the first quarter, compared with a decrease of 14.8 percent in the fourth. National defense decreased 11.5 percent, compared with a decrease of 22.1 percent. Nondefense decreased 2.0 percent, in contrast to an increase of 1.7 percent. Real state and local government consumption expenditures and gross investment decreased 1.2 percent, compared with a decrease of 1.5 percent.
That is good, and suggests the end of the Payroll Tax Social Security contributions holiday did not have as bad of an impact as first suggested.
"Durable goods increased 8.1 percent, compared with an increase of 13.6 percent."
That looks bad. Durable goods are big ticket items (cars, appliances, etc.), not the kind of things which generally have a big holiday spend.
"Nondurable goods increased 1.0 percent, compared with an increase of 0.1 percent."
That is good.
"Services increased 3.1 percent, compared with an increase of 0.6 percent."
That is good.
"Real federal government consumption expenditures and gross investment decreased 8.4 percent in the first quarter, compared with a decrease of 14.8 percent in the fourth."
So the government spending decrease slowed.
"National defense decreased 11.5 percent, compared with a decrease of 22.1 percent."
Again, the government spending decrease slowed.
"Nondefense decreased 2.0 percent, in contrast to an increase of 1.7 percent."
Here government spending decreased. The Sequester! The Sequester!
"Real state and local government consumption expenditures and gross investment decreased 1.2 percent, compared with a decrease of 1.5 percent."
The state and local government spending decrease slowed.
I do think it is fair to say the reduction in government spending (primarily military), is negatively impacting the economy. The 1990 recession was in part due to the dramatic reduction in defense spending as the result of the end of the Cold War.
The country is essentially in a steady state economic depression. The little growth we see is not keeping up with monetary inflation (QE) and population growth.
However, the real question is why should the American economy be so tightly coupled to, in fact, dependent on, Federal Government spending? We have seen major increase in federal spending (the Stimulus) accomplish little. But a minor reduction in spending causes a moribund economy?
We need to cut government spending, and incentivize business spending.