Cross Timbers Business Report, Volume 21, Number 3, Spring 2008 Page: 1
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Cross Timbers Business Report
Published by the College of Business Administration, Tarleton State University
Articles by Members of Delta Mu Delta, Nidhi Gupta, Student Editor
Volume 21, No.3
Economic Growth Remains Anemic
By Matt Hillman
Overall gross domestic product (GDP) for the United
States has stayed at a consistent 0.6 percent growth rate for
the last and first quarters of 2007 and 2008. According to
the seasonally adjusted data reported by U.S. Department
of Commerce, the last time the growth rate fell below 1.0
percent was in the fourth quarter of 2002 when it touched
The reason for the drop in last two quarters can be attri-
buted to shaken mortgage businesses and exploding fuel
prices. These forces are likely causes for the cutback in
consumer and business spending. GDP is heavily affected
Changes in Real GDP
Annual Percentage Rates
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2006 2007 2008
Source: Bureau of Economic Analysis, U. S. Department of Commerce
by consumer spending which makes up 68 percent of this
economic scoreboard, thus the weak 1.0 percent growth for
consumer spending in the first quarter had a major impact
on the overall GDP.
Durable goods purchases dropped 6.1 percent last quar-
ter versus the 2.0 percent increase for the last quarter of
2007, and non-durable purchases dropped by 1.3 percent.
The only gain was in Services spending which climbed 3.4
The housing sector showed a significant drop of 26.7
percent in the first quarter of this year, which reduced
overall GDP by 1.23 percentage points.
Exports rose by 5.5 percent and imports by a smaller
2.5 percent in the first quarter of 2008 thus adding 0.22
percentage points to GDP. Business spending fell by 2.5
percent when compared to a moderate rise of 6 percent in
the last quarter of 2007. Federal government spending rose
4.6 percent for the first quarter of this year, which com-
pares to the 0.5 percent gain for the previous quarter.
The price index for gross domestic purchases measur-
ing the prices paid by the U.S. populace rose 3.5 percent
for the fourth quarter.
There is a major debate about a possible turnaround in
the second quarter. Consumers will receive economic sti-
mulus payments during this period, and the Federal Re-
serve's aggressive interest rate cuts should offset some
negative effects of higher energy prices and falling home
GDP data is collected and reported by the Department
of Commerce on a quarterly basis. A final estimate will be
posted after two revisions are made.
Matt Hillman is a senior graduating with a Bachelor's
degree in marketing and will continue his education in the
MBA program at Tarleton State University.
Inflation Rates Remain Moderate
By Cindy Pierce
The average increase in consumer prices in the first quarter
of 2008 was lower than the average for the last quarter of
2007. The largest contributor to last quarter's inflation rate
was energy, which posted a steep increase in March. Prices for
apparel are currently taking a downturn in the market.
However, a larger increase in the index for household
furnishings and operations, in addition to an increase in airline
fares, offset this decline.
The CPI (Consumer Price Index) stood at 212.5 at the
beginning of 2008, and then rose to 213.3 by the end of March
(base year 1982-1984). This value indicates a 4.0 percent
increase from one year ago. On a seasonally adjusted basis,
the index advanced 0.3 percent in March, and no change was
recorded for February. The energy index made a significant
increase of 1.9 percent, after declining 0.5 percent in February.
The food index increased 0.4 percent in February and 0.2
percent in March. The index for food at home also increased
0.2 percent. After virtually no change in February, the index
for all items less food and energy rose 0.2 percent in March.
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Tarleton State University. College of Business Administration. Cross Timbers Business Report, Volume 21, Number 3, Spring 2008, periodical, Spring 2008; Stephenville, Texas. (texashistory.unt.edu/ark:/67531/metapth284677/m1/1/: accessed November 17, 2017), University of North Texas Libraries, The Portal to Texas History, texashistory.unt.edu; crediting Tarleton State University.