Marketplace Report: GDP Growth Up Sharply
CHADWICK: Back now with DAY TO DAY. There are those troubling gas prices but overall the national economy looks very good.
For the first quarter of 2006, the country's gross domestic product grew by 4.8 percent; that's the strongest rate in more than two years. Marketplace's New York Bureau Chief, Bob Moon, joins us. Bob, this economic growth spurt, is it going to be enough to get the country past these energy costs?
BOB MOON (Bureau Chief, New York Marketplace): Well Alex, it doesn't hurt to have the economy turning in such a robust performance heading into the latest rise in oil and gasoline prices. In a way, you can liken this to a patient who has a sudden health crisis. The prognosis is going to be a lot better if they were in good shape to begin with. And the economy is much the same in being able to shake off some of the ill effects that these rising energy costs are causing. So let's take a look at the patient's medical chart, if you will.
In the first three months of this year, as you mentioned, the Commerce Department reports a 4.8 percent increase. That amounts to the country's economic strength. Compare that to the final quarter of last year; this latest reading is more than twice the 1.7 percent rate at the end of 2005. Even better, this growing strength seems to be spread across the entire economy. These latest figures show consumers, businesses and government all contributing to the robust spending and that is helping to spur this healthy economy.
CHADWICK: Well, it's a lot of good news but I wonder about inflation.
Mr. MOON: Well, that's always a concern, of course. The Labor Department though is out with a separate report today. It measures what employers pay in wages and benefits. Those payroll costs actually rose at the slowest pace in seven years during the first quarter of this year. So that should ease any concerns about potential wage-induced inflation.
The Economic Policy Institute issued its own report this morning and it suggested this disparity reflects a Jekyll and Hyde economy because while the overall growth rate looks good, wage increases for American workers are still well below the inflation rate. And the group says that the overall economy may be doing fine but somehow that's not helping the workers who are helping to build the economy.
CHADWICK: And when you put the workers into the mix here, how are consumers overall feeling about the economy these days?
Mr. MOON: Well, this is a day that we get quite a few economic reports so I can point to a new survey on consumer confidence to give you an answer on that. The University of Michigan is out with a wrap-up on consumer sentiment for April. Reuters' reports that prescription-only survey was down from March, apparently reflecting this souring mood about energy costs. On the other hand, consumer sentiment does remain relatively high, so there is some wiggle room if you will.
Today in the Marketplace newsroom, we are looking further into how the economy is really coping with these rising energy costs.
CHADWICK: Bob Moon of Public Radio's daily business show, Marketplace. It's produced by American Public Media.