It's better than the 0.6% pace reported in the fourth quarter of 2007. Consumer spending, which accounts for two-thirds of the nation's GDP, increased at just a 1.0% pace in the first quarter--the slowest since the 2001 recession, he said.
"Consumers are faced with higher energy and food prices, leaving them with less money to spend on other things. Falling home values are making many homeowners feel less wealthy and less inclined to spend. And, the credit crunch has made it harder to finance big-ticket purchases," Turner relayed.
Businesses are showing caution by cutting spending on equipment and software. But investment in commercial construction wasn't as weak as the government first estimated, contributing to the upward revision to first-quarter GDP. Export growth also contributed to the first quarter results having increased 2.8%.
Conventional wisdom leads many to forecast the economy to eek along at a 0.5% pace during the second quarter, which is expected to be the weakest quarter of the year. It should then pick up to 2.3% pace in the third quarter before easing back to about 2.0% at the close of the year.
In a speech before the Inter-national Monetary Conference recently, Federal Reserve Chairman Ben Bernanke said, "Interest rates were well positioned to promote moderate growth and price stability over time." Turner read that as a signal that the FOMC may be finished cutting the overnight benchmark target rate for banks. The Fed is also keeping its watchful eye on the value of the dollar by monitoring foreign exchange markets.