The BEA has released the First Quarter GDP Report. The annualized growth came in at 3.2%, which was at the middle of the Bloomberg consensus range of 2.7% to 4.5% (though the consensus number was 3.4%). Last quarter, inventories were the growth story. Now consumers are starting to buy the stuff (emphasis mine):

Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 3.2 percent in the first quarter of 2010, (that is, from the fourth quarter to the first quarter), according to the “advance” estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 5.6 percent.

…

The increase in real GDP in the first quarter primarily reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, exports, and nonresidential fixed investment that were partly offset by decreases in state and local government spending and in residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.

The deceleration in real GDP in the first quarter primarily reflected decelerations in private inventory investment and in exports, a downturn in residential fixed investment, and a larger decrease in state and local government spending that were partly offset by an acceleration in PCE and a deceleration in imports.

Motor vehicle output added 0.52 percentage point to the first-quarter change in real GDP after adding 0.45 percentage point to the fourth-quarter change. Final sales of computers added 0.19 percentage point to the first-quarter change in real GDP after adding 0.01 percentage point to the fourth-quarter change.

…

Real personal consumption expenditures increased 3.6 percent in the first quarter, compared with an increase of 1.6 percent in the fourth. Durable goods increased 11.3 percent, compared with an increase of 0.4 percent. Nondurable goods increased 3.9 percent, compared with an increase of 4.0 percent. Services increased 2.4 percent, compared with an increase of 1.0 percent.

I had a lot of concern about the buildup in inventories not being followed by increases in consumer activity. It looks like we’re following the traditional paths of recoveries, except for the residential investment part, which is much weaker (for obvious reasons: we did have a housing bubble). Given the lack of income growth and the lack of mortgage equity withdrawals, I’m a little concerned about the source of this consumer spending. I know the savings rate has collapsed again. I also know that a small amount (less than 10%) of spending can be traced to people simply not paying their mortgage but continuing to spend on other things. Neither of these sources of consumption are sustainable. We’ll probably have some income growth in April, but June will probably reverse that a bit.

To repeat last month: given that we are still a consumer economy, let’s check consumery things. Here are their contributions to this GDP number:

1. Motor vehicles and parts: -0.02

2. Furnishings and household stuff: 0.24

3. Recreational goods and vehicles: 0.32

4. Eating out: 0.34

5. Clothes: 0.23

6. Paying the utility bills: 0.32

7. Health care: 0.26

8. Paying bank fees: -0.04

9. Eating in: 0.18

In total we have:

1. Goods: 3.33

2. Services: 1.02

3. Structures: -1.11

4. Motor vehicle output: 0.52

5. Final sales of computers: 0.19

This is a completely unremarkable GDP report, which is itself quite remarkable. We are recovering from the last downturn almost exactly as if it were a normal recession (again, except for the residential investment part). We’re at a normal rate of growth. This is remarkable, no matter how you interpret it. You could interpret it as proof that everyone who was running around calling this the worst downturn since the Great Depression (including me) was Bonkers McCrazyface. The whole thing was an unremarkable event blown out of proportions. You could interpret it as not nearly enough growth to compensate for the worst downturn since the Great Depression. Our V-shaped recovery didn’t happen, and the next wave of this crisis is going to be even more damaging than the first. Either way, it’s absolutely remarkable to see a quarter of perfect normalcy.