contributed to taming inflation during the period.
In the U.S., consumer prices rose 2. 3 percent over
the past 12 months, down from near 4 percent in the
middle of last year.
Following weak advances throughout 2011, consumer spending rose 2. 9 percent in the first quarter.
Spending on goods outpaced spending on services
by a wide margin. Consumers focused their dollars on durable goods, which gained 15. 3 percent.
With the average age of U.S. vehicles rising and new
models coming to market, sales of vehicles jumped
28. 7 percent. Consumers also upped their spending
on furniture and household goods by 10. 5 percent.
In the nondurable goods category, increases in purchases of clothing, shoes, food and beverages outweighed a cutback on gasoline and energy goods.
Government spending—the other major component of GDP—declined 3.0 percent, driven by
budget cuts across the board, at federal, state and
local levels. At the federal level, defense cuts of 8. 1
percent added to decreases in nondefense spending.
Squeezed by lower revenues, state and local governments continued to slash spending by 1. 2 percent,
the seventh consecutive quarter decline.
Building on an encouraging end of 2011, employment trends closed the first quarter on a positive
note. The private sector added a net 717,000 payroll
jobs to the economy over the period. The bulk of
that gain came during January, when private businesses added 277,000 positions.
But concerns are developing over the weakening
pace of job gains in the second quarter, disappointing first-quarter earnings reports, and many companies which have been announcing major layoffs in
May. This trend was also mirrored in the figures for
first-time unemployment insurance claims, which
steadily declined towards 360,000 per week over
2011, only to jump to 384,000 per week during the
first quarter. The unemployment rate rose to 8. 2 percent in May from 8. 1 percent in April.
Amid a backdrop of moderate-but-positive economic growth, demand for commercial space is rising and availability is declining across all property
types. A main driver of the rebound comes from low
levels of new construction in recent years, which
have prevented a run-up in supply. The other drivers
are higher employment in office-using industries,
increased international trade, and housing market
conditions which have turned many owners into
renters in the past 5 years.
