Gross domestic product increased at a 3.2% annualized rate in the first quarter of 2010, below economists’ estimates, and core personal consumption expenditures grew at the smallest pace in 41 years, the Commerce Department reported Friday.
Consumer spending increased 3.6% in the quarter ending March 31, the strongest gain in three years.
Consumer spending revived during the quarter as retail sales figures revealed increased demand for electronics and autos.
Consumer spending was also likely aided by personal tax relief provided by the American Recovery and Reinvestment Act of 2009. During the first quarter, ARRA lowered personal taxes by about $121 billion at an annual rate.
The tax cuts, combined with a $95 billion increase in government social benefits, boosted disposable income by about $216 billion.