Consumer spending fell 3.5% and mounting job losses make the final GDP number look more grim going forward. Since real consumption was down, inventories accumulated and for the moment seem to mask the true GDP figure. Demand across the board has been reduced and larger inventories mean lower sales from businesses. Analysts expected a 5.5% drop, which did not materialize thanks to shipments of good, even as unsold inventory accumulates.
Exports which had been one of the strong points for the US Economy contracted even with the help of a weaker USD, as a global recession is taking place and foreign markets reduce their imports. The stimulus package that was approved by congress is seen by many as a measure against mounting layoffs and a good jump start to the American consumer confidence.
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