ALEX CHADWICK, host:
From NPR News, it's Day to Day. Maybe it's meager news, but it is good news. The nation's broadest measure of economic growth - better than expected. For the first part of the year the Commerce Department reported today, gross domestic product expanded just a little more than half a percentage point. Not much, but still all to the good. Martketplace's Sam Eaton is with us. How good is the news for the overall economy, Sam?
SAM EATON: Well, Alex, economists are calling it a hollow victory, at best. While the point six percent growth rate for the first quarter beat some of the more dismal forecasts, it doesn't mean that we're out of the woods. The U.S. is seeing its weakest consumer spending since 2001. Homebuilding is at a 27 year low. Combined, those factors are a huge drag on the economy. But not enough, evidently to dip into negative growth and that of course is the classic definition of the dreaded R-word, that has been at the tip of so many tongues, not excluding Greg McBride's of bankrate.com.
Mr. GREG MCBRIDE (Bankrate.com): Technically, we are not in a recession, but if it walks like a duck and quacks like a duck, it's probably a duck. And to millions of consumers around the country, it feels like a recession.
EATON: And since consumer spending accounts for about 70 percent of GDP, what the consumer thinks, makes a big difference here.
CHADWICK: So, if consumer spending is poor, and we all know housing is in a terrible slump, why the better than expected growth?
EATON: Well, one reason, Alex, is the weak dollar. That makes U.S.-made goods much cheaper on the global market. Exports rose five and a half percent since January. Government's spending also provided a slight boost to GDP, but the real star of quarter growth was rising inventories. Now that is all the extra stuff businesses keep on hand, with the intention of selling it. Stocks of those unsold goods rose significantly higher than they did in the last quarter and with a nearly one percent contribution to GDP it may have single handedly kept the economy out of the red.
CHADWICK: So, what does that mean for the future?
EATON: Well, for all the things, Alex, that could have given the economy a boost, rising inventories are not ideal, especially at a time when consumers are reining in their spending. It sets up the next quarter for a major inventory correction, as businesses try to unload all of that stuff in an economy where people are hanging on to the little cash they have. And what people do spend isn't going as far as energy and food prices are soaring.
On a brighter note, though, the government began shelling out 600 dollar tax rebates this week to about a 100 million Americans, but even that isn't likely to reverse one of the biggest drags on the economy right now, which is rising unemployment. Payrolls have been shrinking for three consecutive months now. All told, nearly 300,000 workers have lost their jobs. If the trend in job loses continues, with Friday's report, you can bet there will be a lot more economists and consumers jumping onto R-word bandwagon.
CHADWICK: Thank you Sam. Sam Eaton of Public Radio's daily business show, Marketplace.