GDP would have been even worse, if it wasn’t for how fast imports have plummeted; They are falling faster than exports, perversely creating a appearance of relative improvement . . .
The huge investment slump was the key story in Q1.
More to the point:
Residential investment (RI) has been declining for 13 consecutive quarters, and Q1 2009 was the worst quarter (in percentage terms) of the entire bust. Residential investment declined at a 38% annual rate in Q1.
Non-residential investment was down, but not quite as sharply.
This is important to follow because residential tends to lead the economy, equipment and software is generally coincident, and nonresidential structure investment trails the economy.
Because there is so little residential investment left, it won't continue to have such a drag on the economy. But because there is so much inventory, there won't be a quick rebound.
As always, residential investment is the most important investment area to follow - it is the best predictor of future economic activity.
As of this posting, the market is surging. Which ought to reinforce to investors and other economy watchers that the market is not tracking the actual economy. An FOMC announcement comes later in the day, and the market could then take a hit.
It's also critically important that we supporters of the Administration remain honest about any purported recovery. The Reaganomic Bush Economic Disaster won't easily be repaired. And the economy is still in deep trouble.