The 3.2% print for the 1st quarter was a bit under expectations, but once again there were a few areas that shined. In particular consumer spending was once again showing that money (whether savings, earnings or transfer payments) is flowing.

Also, there was less government spending over the past two quarters, but defense spending was up.

According to the BEA:

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.

Private inventory was a big part of the 4th quarter GDP by adding 3.79%, but only 1.57% to the 1st quarter. In other words, the inventory restocking cycle is still progressing, but companies continue to keep a lean warehouses.

But again, the major component was the consumer and everything surrounding their efforts to spend:

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.

The biggest drag on this quarter’s GDP was in the area of real estate. Even though we see the real estate sector beginning to come off of the bottom, there was a drop in overall activity this quarter.

Real nonresidential fixed investment increased 4.1 percent in the first quarter, compared with an increase of 5.3 percent in the fourth. Nonresidential structures decreased 14.0 percent, compared with a decrease of 18.0 percent. Equipment and software increased 13.4 percent, compared with an increase of 19.0 percent. Real residential fixed investment decreased 10.9 percent, in contrast to an increase of 3.8
percent.