First quarter 2009 GDP fell by 6.1 percent.  The Bureau of Economic Analysis advance estimate of Gross Domestic Product (GDP) for the first quarter of 2009 showed that GDP fell at an annualized rate of 6.1 percent.  The decline in GDP was due to large drops across all components of domestic private investment: nonresidential investment in structures and equipment, residential construction, and private inventories (See Chart).  The decline in nonresidential investment suggests continued weakness in business confidence.  The real change in private inventories subtracted almost 3 percentage points from first quarter GDP.  Private businesses have decreased inventories for the last two consecutive quarters.  On the plus side, low inventories may lead to increased production if consumer spending continues to increase, sharpening the recovery once it gets started.  Net exports contributed almost 2 percentage points to GDP, but this was due to lower imports rather than increased exports.  Imports fell due to declines in demand as well as declines in oil prices.  Personal consumption expenditures also contributed positively to GDP last quarter, after declining for the previous two quarters.

Consumer confidence rose in April.  Two estimates of consumer confidence showed marked increases in April.  The Conference Board’s Consumer Confidence Index improved considerably in April, now standing at 39.2 (1985 = 100), its highest reading so far in 2009.  Consumers’ expectations for the future were rosier than current expectations, and are consistent with consumers’ expectations that the fall in economic activity is nearing the bottom.  The Reuters/University of Michigan Index of Consumer Sentiment was 65.1 in the April 2009 survey -- the first positive year-over-year change since mid-2007.

Housing decline moderates.  The S&P Case-Shiller Composite Index for house prices in 20 cities showed that the decline in house prices appears to have moderated. The monthly decline was 1.9 percent in February, less than the 2.2 percent decline in January.  This is the first time since November 2008 that this index has improved over the previous month.  Data on pending home sales released by the National Association of Realtors indicates that low prices, low mortgage interest rates, and tax credits from the stimulus package have started luring new home buyers into the market.

Initial jobless claims down.  The 4-week moving average of initial jobless claims declined for the third straight week.  After reaching a peak of 658,750 during the week of April 4th, the average has declined to 637,250.  This is the first time since the start of the recession that the 4-week moving average has declined for three straight weeks.