Unexpectedly, 1Q 2011 GDP not revised upward, consumer spending down, inflation soars, jobless claims up

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5/26/11, "Consumers hold back growth, rebound seen muted," Reuters, by Lucia Mutikani

"The economy grew at an annual 1.8 percent rate in the first three months of this year, the Commerce Department said on Thursday, unchanged from an earlier estimate and weaker than most forecasts. Economists had expected the first-quarter pace to be revised up to 2.1 percent....

Consumer spending -- which accounts for more than two-thirds of U.S. economic activity -- expanded at a 2.2 percent rate in the first three months of this year, slower than the previously reported 2.7 percent.

After rising at a 4 percent clip in the fourth quarter, spending was clipped by high food and gasoline prices, which sent inflation soaring at its fastest pace in 2-1/2 years.

The personal consumption expenditures price index rose at an unrevised 3.8 percent rate in the first quarter. That compared to the fourth quarter's 1.7 percent increase....

The soft consumer spending overshadowed a $52.2 billion increase in business inventories, which was well above the initially reported $43.8 billion rise....

The GDP report also showed after-tax corporate profits fell at a rate of 0.9 percent in the first-quarter after rising at a 3.3 percent pace in the fourth quarter....

Economists had expected corporate profits to grow at a 2.3 percent pace....

"The weakness in the jobless claims data has persisted too long to ignore..." said Michael Feroli, an economist at JPMorgan in New York."

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From the Reuters headline, one is free to imagine 'consumers' are deliberately trying to keep Reuters types from getting better news. ed

via GWP