Plus: GDP’s Rise, Jobless Claims’ Fall and Consumer Spending’s Best Showing Since the Recession Began.

GDP Rises in First Quarter
Real gross domestic product (GDP) for the United States grew at a slow but steady pace in the first quarter of 2010, marking the third consecutive quarter of growth. Gains were driven largely by an increase in business investment and stronger consumer spending in the first three months of the year.

According to the U.S. Department of Commerce on Friday, Q1 real GDP — a total measure of goods and services produced in the country — rose at an annual rate of 3.2 percent, down from the 5.6 percent growth reported for the fourth quarter of 2009.

The Commerce Department attributed the first-quarter gains to improvements in consumer expenditure rates, increased private inventory investments, a boost in exports and higher nonresidential fixed investments. Motor vehicle output alone added 0.52 percentage points to GDP growth, following a 0.45-point contribution to the previous quarter’s growth.

“The details of the GDP report paint a picture of an economic recovery that is well underway and a nation that is unlikely to slide back into recession in 2010,” the Washington Post reports. “Those gains bode well in that they show both consumers and corporate America starting to loosen their purse strings.”

Despite the positive signs, concerns remain over the slowdown in the pace of GDP expansion, which indicates a sluggish economic recovery for the long-term future.

“In the past six months, GDP has expanded at a 4.4 percent pace, faster than the 2.8 percent average over the past 25 years, but it has failed to surge into [the] 7 percent-to-10 percent range as typically happens after a deep recession,” MarketWatch explains. “Most economists continue to expect a rather hobbled recovery, with not nearly enough growth to bring the U.S. unemployment rate down rapidly.”

President Obama acknowledged on Friday that many Americans might find little comfort in the latest economic numbers because “‘you’re hired’ is the only economic news they’re waiting to hear,” NPR reports.

Jobless Claims Fall
Initial jobless claims in the week ending April 24 fell to 448,000, a drop of 11,000 from the previous week’s revised total, while the four-week moving average for new initial jobless claims rose by 1,500 to 462,500, according the U.S. Department of Labor on Thursday. Minus seasonal adjustments, initial claims fell by 11,171 from the prior week, reaching 423,286, a significant improvement from the 583,457 claims from the same period in 2009.

While this marked the second consecutive week of declines in the jobless rate, “[m]any economists have been disappointed that claims haven’t fallen faster, which would signal companies are beginning to reduce layoffs and the job market may be stabilizing,” the Associated Press reports.

According to the Washington Post’s Economy Watch blog, the general unemployment rate stands a stronger chance of improving if the four-week moving average, which smooths volatility in the data to provide a clearer long-term trend, should flatten and begin to decrease below the 400,000-mark that experts believe signals a healthy employment market. However, this has not been the case in recent weeks.

“Though the manufacturing-led U.S. economic recovery is spreading out to other sectors, it is probably not vigorous enough to encourage much hiring,” Reuters explains. “Indications are that unemployment will likely remain elevated for a while.”

Consumer Spending’s Best Showing Since Recession Began
U.S. consumers rebounded and helped drive the GDP growth in the first quarter of 2010, as consumer spending rose at the fastest rate in three years in the first quarter, powering the economy to a 3.2 percent growth rate, the Department of Commerce reported last week.

Consumers increased their spending at a 3.6 percent annualized rate, the strongest showing since early 2007 — before the economy tipped into a recession. In Q4 2009, consumer spending grew a lackluster 1.6 percent.

“In the first quarter, consumers spent more on things like home furnishings and household appliances, recreational goods and vehicles, clothing, and going out to bars and restaurants,” the Associated Press says. “Even though consumers aren’t spending as freely as they normally do early in strong economic recoveries, they are spending sufficiently to keep the economy expanding.”

In March, boosted by spending on automobiles and other durable goods, real U.S. consumer spending increased 0.5 percent to a record high, at last surpassing the pre-recession peak set in November 2007, according to separate estimates from the Commerce Department last week.

Consumer spending fuels about 70 percent of the U.S. economy. Consumer confidence remains mixed and, looking ahead, analysts expect consumers will be wary of stepping up spending much further.

U.S. to Curb New Drilling as Oil Slick Hits Shore
In late March, the Obama administration announced it would lift a decades-old moratorium on oil drilling off the mid- and south-Atlantic coasts, areas in the Gulf not currently leased, and in waters off Alaska. No new leases have been granted yet, and on Friday the White House said that there will be no new domestic offshore drilling until the investigation into the Gulf of Mexico oil spill is complete.

On April 20, an explosion on the Deepwater Horizon offshore drilling rig operating off the coast of Louisiana resulted in a fire that sank the rig and caused a large-scale, ongoing oil spill. The explosion killed 11 people and left the uncapped well gushing oil nearly a mile below the water’s surface about 40 miles offshore. The spill, currently pegged at a circumference of about 600 miles, is now spilling an estimated 5,000 barrels a day into the Gulf of Mexico, where the rig was operating.

Late last week, the Obama administration announced that until authorities figure out why the rig exploded, it will move to halt new oil drilling in the Gulf of Mexico as the oil from a massive slick caused by the Deepwater Horizon blast comes ashore. The president said that responsibility for the cleanup rests with BP, the owner of the lease, but that the government would assist affected communities.

For more information on the current situation and what it means for the future of offshore drilling, see the EPA Response to BP Spill in the Gulf of Mexico and Fast Company’s What Happens to Offshore Drilling After the Gulf Oil Spill?