GDP Rose More Than Expected in Q1

(Updated from 8:34 a.m. EDT)

By all accounts it was a lackluster first quarter for the U.S. economy, although it turned out a bit better than expected. Gross domestic product grew 2% in the first quarter, hampered by another sharp decline in business investment.

However, the economy grew more than it did in the fourth quarter, owing to increases in consumer spending on durable goods, an upturn in housing and an unexpected narrowing in the trade deficit. The consensus expectation among economists had been for growth of just 1.1%. This is the advance figure for GDP; the report will be revised two more times.

This report certainly turned out better than expected, but it's not a strong report, and in some ways, the strength of the headline number is misleading. For one, the improving trade deficit is a positive for this report not because growth in exports was stellar, but because imports are falling at a greater rate than exports. ...